3:5 bonus from Reliance Power
Reliance Power has decided to offer three bonus shares to its investors for every five held in an effort to compensate for the fall of its share price, However the bonus shares will not be offered to the promoters.
The bonus issue will effectively reduce the Reliance Power’s share price by nearly 40 per cent to Rs 269 for retail investors (who paid Rs 430 a share) and by 37 per cent to Rs 281 for institutional investors. The market reaction to this bonus announcement appeared mixed. One long time broker said it would make little difference since after any such issue of shares, the stock price typically goes down and investors may still find they have not gained much. “However, they may be more favourably disposed towards the group, which has lined up more IPOs,” said another broker, After shareholder approval, the record date for the bonus shares would be communicated through the exchanges.