Reliance Energy ipo
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Fundamental analysis of Reliance Power..
Will it, won’t it? The curiosity of the media is finally vetted nd the IPO details of Reliance Power have come out of the wraps. The much anticipated, probably the largest ever IPO to hit the Indian capital markets in recent times, is out for all to scrutinise and assess.
The company having filed its Draft Red Herring Prospectus (DRHP) with SEBI on 03-10-07, all the speculations have come to rest. The terms of the issue, size, object, project, means of finance, promoters contribution etc. are as under:-
Issue Size 130 crore equity shares of Rs.2 each, by 100% book built issue. This size is 11.5% of the total equity of 1,130 crore equity shares.
Promoters’ Contribution – 16 crore equity shares of Rs.2 each to be subscribed by the Promoters at the same price as being offered to the public. Reliance Energy Ltd. (RIL) and AAA Projects Ventures Pvt. Ltd. (AAA) being the joint promoters would be subscribing 8 crore equity shares of Rs.2, each.
Net Public Issue – 114 crore equity shares of Rs.2 each, shall be offered to the public, by a book-built issue.
Promoters – REL and AAA are the promoters of the company.
Post Issue Equity – Present equity comprising of 1,000 crore equity shares of Rs.2 each, being Rs.2,000 crores which shall rise to 1,130 crore equity shares, of Rs.2 each, for Rs.2,260 crores.
Promoters Stake – REL shall be holding 508 crore equity shares of Rs.2 each,being 44.95%, while AAA shall be holding 508 crore equity shares of Rs.2 each, being 44.95%. Remaining 114 crore shares of Rs.2 each being 10.10% shall be held with the public.
BRLM – Book Running Lead Managers to the issue are Kotak, UBS, ABN Amro, Deutsche Equities, Enam, ICICI, JM and JP Morgan while Co-BRLM are Macquarie Advisory and SBI Capital.
Listing – NSE and BSE.
Boards of Directors – Anil Ambani, S. L. Rao, J. L Bajaj, Dr. V. K. Chaturvedi and Dr. Yogendra Narain. Expect for Anil Ambani, all are Independent Director and all were appointed on a single day viz. 30-09-07.
Financials – FY 07 – Total Income Rs.2.25 crores, PBT Rs.54 lakhs, and PAT Rs.16 lakh. For six months ending 30-09-07 total income was Rs.3.23 crores, PBT Rs.1.78 crores and PAT Rs.1.18 crores. Paid-up equity as on 30-09-07 Rs.2,000 crores and net worth Rs.2,006.91 crores. Average cost per share to promoters – Rs.2 (having issued entire equity at par) and NAV on 30-09-07 per share is Rs.2.01.
Cost of Project – The company is implementing following power projects: -
1.Rosa -I-- Rs.2702 Crores. coal
2.Rosa- II-- Rs.2460 coal
3.Butibori --- Rs. 1405 coal
4. Sasan -- Rs. 18342 coal
5. Shahpur --Rs. 4800 coal
6.urthing sobla -- Rs.2080 Hydrro
total cost of all projects -- 31789Crores
Balance of Rs.25,431 crores shall be mobilized by way of term loan with Debt Equity ratio of 4 : 1. PPA entered for 4,560 MW for Project 1 and 4, for 25 years.
Projects in Pipeline –
1) 7,480 MW Gas based power project at Dadri
2) 3,960 MW Coal based at M.P.
3) 2,800 MW Combined Cycle Gas Fired at Shahapur
4) 1,000 MW Hydro at Siyom.
5) 1,200 MW Hydro Kalai II
6) 700 MW Hydro at Tato
17,140 MW
Cost of Project & Means of Finance for these projects, have not yet been worked out.
Summary of Power Projects-
6 Coal based – 10,620 MW
2 Gas based – 10,280 MW
4 Hydro based – 3,230 MW
12 Total 24,200 MW
Western India 12,220 MW
Northern India 9,080 MW
North Eastern Region 2.900 MW
Total 24,200 MW
Total cost of 12 projects are Rs.95,591 crores, which is to be financed by debt of Rs.76,473 crores in debt equity ratio of 4 : 1
Payment Facility – There are two payment method. Method 1 allows 25% on application and remaining 75% on Due Date and available to Retail and Non-Institutional category. Method 2 asks for full payment on application, available to Retail and Non-Institutional. QIB category needs to pay 10% only with application.
Background of Company – Incorporated on 17-01-95 as Bawana Power P. Ltd., name changed to Reliance Delhi Power P. Ltd. to Reliance E. Gen P. Ltd. to Reliance Energy Generation P. Ltd. to Reliance Energy Generation Ltd. to Reliance Power Ltd. with effect from 4th July 07.
Expected Band – As the company has estimated a fund requirement of Rs.6,148 crores plus fund for general corporate purposes and issue expenses, the same is estimated at about Rs.7,000 crores. Hence, price band could be between Rs.50 to Rs.55 per share, by which Rs.6,500 crores to Rs.7,150 crores can get mobilised, which is less than US $ 2 Billion.
Grey Market Premium – Grey Market Premium of Rs.32 to Rs.33 per share, over and above the issue price. Application premium is Rs.4000 per application of Rs.1 lakh.
Expected Time of IPO- Post Diwali, around 15th November, Labhpanchmi Day, which is considered most auspicious day, especially in Gujarat.
Implications – Probably the fastest filed DRHP where –
1) 8 BRLM are working.
2) DRHP filed on 03-10-07 with SEBI, with accounts incorporated upto 30-09-07 and directors appointed on 30-09-07.
3) Reliance Public Utility Pvt. Ltd. having merged with the company w.e.f. 30-09-07.
4) Face value of equity shares sub-divided from Rs.10 to Rs.2, w.e.f. 30-09-07.
5) The company must not have received confirmation for filling of various forms with Registrar of Companies viz. Form 32, Form 2, Form 23 etc.
6) 2nd October, being national holiday, otherwise the company would have filed DRHP on 02-10-07 itself. This must probably be a world record of having filed DRHP for raising over US $ 1.5 billion in just 1 working day.
7) This must be a costliest issue by any company, for its greenfield projects. Also, must be only issue where promoters stake of over 98% (1,000 crore shares out of 1,016 crores shares) has been issued at par.
8) Probably the only company having formed on the basis of the projects of existing company, which has stake of less than 45%, and despite that, all the projects which are now being executed, have been originated or conceived by REL.
9) Promoters in their individual capacity, acquiring about 45% stake of new company, virtually at par.
Will it, won’t it? The curiosity of the media is finally vetted nd the IPO details of Reliance Power have come out of the wraps. The much anticipated, probably the largest ever IPO to hit the Indian capital markets in recent times, is out for all to scrutinise and assess.
The company having filed its Draft Red Herring Prospectus (DRHP) with SEBI on 03-10-07, all the speculations have come to rest. The terms of the issue, size, object, project, means of finance, promoters contribution etc. are as under:-
Issue Size 130 crore equity shares of Rs.2 each, by 100% book built issue. This size is 11.5% of the total equity of 1,130 crore equity shares.
Promoters’ Contribution – 16 crore equity shares of Rs.2 each to be subscribed by the Promoters at the same price as being offered to the public. Reliance Energy Ltd. (RIL) and AAA Projects Ventures Pvt. Ltd. (AAA) being the joint promoters would be subscribing 8 crore equity shares of Rs.2, each.
Net Public Issue – 114 crore equity shares of Rs.2 each, shall be offered to the public, by a book-built issue.
Promoters – REL and AAA are the promoters of the company.
Post Issue Equity – Present equity comprising of 1,000 crore equity shares of Rs.2 each, being Rs.2,000 crores which shall rise to 1,130 crore equity shares, of Rs.2 each, for Rs.2,260 crores.
Promoters Stake – REL shall be holding 508 crore equity shares of Rs.2 each,being 44.95%, while AAA shall be holding 508 crore equity shares of Rs.2 each, being 44.95%. Remaining 114 crore shares of Rs.2 each being 10.10% shall be held with the public.
BRLM – Book Running Lead Managers to the issue are Kotak, UBS, ABN Amro, Deutsche Equities, Enam, ICICI, JM and JP Morgan while Co-BRLM are Macquarie Advisory and SBI Capital.
Listing – NSE and BSE.
Boards of Directors – Anil Ambani, S. L. Rao, J. L Bajaj, Dr. V. K. Chaturvedi and Dr. Yogendra Narain. Expect for Anil Ambani, all are Independent Director and all were appointed on a single day viz. 30-09-07.
Financials – FY 07 – Total Income Rs.2.25 crores, PBT Rs.54 lakhs, and PAT Rs.16 lakh. For six months ending 30-09-07 total income was Rs.3.23 crores, PBT Rs.1.78 crores and PAT Rs.1.18 crores. Paid-up equity as on 30-09-07 Rs.2,000 crores and net worth Rs.2,006.91 crores. Average cost per share to promoters – Rs.2 (having issued entire equity at par) and NAV on 30-09-07 per share is Rs.2.01.
Cost of Project – The company is implementing following power projects: -
1.Rosa -I-- Rs.2702 Crores. coal
2.Rosa- II-- Rs.2460 coal
3.Butibori --- Rs. 1405 coal
4. Sasan -- Rs. 18342 coal
5. Shahpur --Rs. 4800 coal
6.urthing sobla -- Rs.2080 Hydrro
total cost of all projects -- 31789Crores
Balance of Rs.25,431 crores shall be mobilized by way of term loan with Debt Equity ratio of 4 : 1. PPA entered for 4,560 MW for Project 1 and 4, for 25 years.
Projects in Pipeline –
1) 7,480 MW Gas based power project at Dadri
2) 3,960 MW Coal based at M.P.
3) 2,800 MW Combined Cycle Gas Fired at Shahapur
4) 1,000 MW Hydro at Siyom.
5) 1,200 MW Hydro Kalai II
6) 700 MW Hydro at Tato
17,140 MW
Cost of Project & Means of Finance for these projects, have not yet been worked out.
Summary of Power Projects-
6 Coal based – 10,620 MW
2 Gas based – 10,280 MW
4 Hydro based – 3,230 MW
12 Total 24,200 MW
Western India 12,220 MW
Northern India 9,080 MW
North Eastern Region 2.900 MW
Total 24,200 MW
Total cost of 12 projects are Rs.95,591 crores, which is to be financed by debt of Rs.76,473 crores in debt equity ratio of 4 : 1
Payment Facility – There are two payment method. Method 1 allows 25% on application and remaining 75% on Due Date and available to Retail and Non-Institutional category. Method 2 asks for full payment on application, available to Retail and Non-Institutional. QIB category needs to pay 10% only with application.
Background of Company – Incorporated on 17-01-95 as Bawana Power P. Ltd., name changed to Reliance Delhi Power P. Ltd. to Reliance E. Gen P. Ltd. to Reliance Energy Generation P. Ltd. to Reliance Energy Generation Ltd. to Reliance Power Ltd. with effect from 4th July 07.
Expected Band – As the company has estimated a fund requirement of Rs.6,148 crores plus fund for general corporate purposes and issue expenses, the same is estimated at about Rs.7,000 crores. Hence, price band could be between Rs.50 to Rs.55 per share, by which Rs.6,500 crores to Rs.7,150 crores can get mobilised, which is less than US $ 2 Billion.
Grey Market Premium – Grey Market Premium of Rs.32 to Rs.33 per share, over and above the issue price. Application premium is Rs.4000 per application of Rs.1 lakh.
Expected Time of IPO- Post Diwali, around 15th November, Labhpanchmi Day, which is considered most auspicious day, especially in Gujarat.
Implications – Probably the fastest filed DRHP where –
1) 8 BRLM are working.
2) DRHP filed on 03-10-07 with SEBI, with accounts incorporated upto 30-09-07 and directors appointed on 30-09-07.
3) Reliance Public Utility Pvt. Ltd. having merged with the company w.e.f. 30-09-07.
4) Face value of equity shares sub-divided from Rs.10 to Rs.2, w.e.f. 30-09-07.
5) The company must not have received confirmation for filling of various forms with Registrar of Companies viz. Form 32, Form 2, Form 23 etc.
6) 2nd October, being national holiday, otherwise the company would have filed DRHP on 02-10-07 itself. This must probably be a world record of having filed DRHP for raising over US $ 1.5 billion in just 1 working day.
7) This must be a costliest issue by any company, for its greenfield projects. Also, must be only issue where promoters stake of over 98% (1,000 crore shares out of 1,016 crores shares) has been issued at par.
8) Probably the only company having formed on the basis of the projects of existing company, which has stake of less than 45%, and despite that, all the projects which are now being executed, have been originated or conceived by REL.
9) Promoters in their individual capacity, acquiring about 45% stake of new company, virtually at par.
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