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January 16, 2008

Reliance Power IPO Subscription – All records broken

Anil Ambani Group firm Reliance Power Ltd's initial public offer appears set to break all records in the primary market as it drew a massive response from retail and institutional investors alike who bid to buy shares worth over Rs 100,000 crore on the first day itself.

The first IPO from the Group today received bids for 242 crore shares, or 10.6 times of the 22.80 crore shares on offer for the public. The issue was over-subscribed within a minute of opening -- a record. More than four lakh applications poured in during the day and the average demand from one investor is estimated to be over Rs 100 crore worth of shares.

So much was the demand for the issue that investors encashed a part of their holdings in the secondary market to buy its shares, pulling the benchmark BSE Sensex down by almost 477 points. Even power stocks, including parent firm Reliance Energy Ltd, ended in losses on the bourses.

The Qualified Institutional Buyer (QIB) segment of the IPO was oversubscribed 17 times, while the high net worth individual (HNI) segment was oversubscribed 7.4 times. The portion reserved for retail investors received bids for close to 1.4 times the shares on offer, market sources said.

Overall, the IPO was oversubscribed 10.64 times, with demand worth about Rs 1,09,000 crore, according to data available with stock exchanges. The company looked set to make history with record proceeds of Rs 11,700 crore as almost all bids came at Rs 450, the top end of the price band.

"It is a reflection of the world community in the future of India... Investors seem to be confident in the future of Indian economy," Finance Minister P Chidambaram told PTI.

The issue is the first IPO from the Anil Ambani group, which came into existence in June 2005, after a family settlement that the group chairman reached with his elder brother Mukesh. The IPO will close on January 18.

(From The Economic Times)

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