IPO Snapshot

Reliance Power Limited

PF/ IPON / 10012008 / 373 10 January 2008
Report prepared by Atul Stanley Hermit – [email protected], Phone No. 040 - 23312454 Extension - 304
100% Book Building Issue
Issuer Reliance Power Limited
Public issue of 26,00,00,000 equity shares (constituting 11.50% of post issue paid up capital
of issuer)
Face value of equity shares is Rs.10 per share
Price Band Rs.405 to Rs. 450 per equity share
Issue Size Rs. 10,530 crore – Rs. 11,700 crore
Issue is open From January 15 to 18, 2008
Application for the Issue can be for 15 shares and in multiples of 15 shares thereafter
Book Running Lead
Managers are
Kotak Mahindra Capital Company Limited, UBS Securities India Private Limited,
ABN AMRO Securities (India) Private Limited, Deutsche Equity India Private Limited,
Enam Securities Private Limited, ICICI Securities Limited,
JM Financial Consultants Private Limited, J.P. Morgan India Private Limited
Co- Book Running Lead
Managers are Macquarie India Advisory Services Private Limited, SBI Capital Markets Limited
Registrar to the Issue is Karvy Computershare Private Limited
Issue is to listed on The Bombay Stock Exchange Limited (BSE), The National Stock
Exchange of India
Limited (NSE)
IPO Grading CRISIL IPO GRADE 4/5 by CRISIL Limited, indicating above average
fundamentals
ALLOTMENT BASIS
Promoters Contribution 3,20,00,000 shares
Retail investors At least 6,84,00,000 shares or Issue less allocation to Non-Institutional
Investors and
Qualified Institutional Bidders
Non-Institutional
Investors
At least 2,28,00,000 shares or Issue less allocation to Retail Investors and Qualified
Institutional Bidders
Qualified Institutional
Buyers
At least 13,68,00,000 equity shares
Industry: Power Generation & Operation Group: Anil Dhirubhai Ambani Group
The payment methods available to the investors to apply in this public issue of shares:
Payment Method 1 Payment Method 2
For Retail Individual Bidders and Non-
Institutional Bidders
For Any Category
Amount Payable per
Equity Share (Rs.)
Face Value Premium Total Face Value Premium Total
On Application 2.50 112.50 115.00 10.00 * *
By Due Date for Balance
Amount payable 7.50 * * - - -
Total 10.00 * * 10.00 * *
* to be calculated as per the Issue Price calculated on the completion of the book building process.
A discount of Rs.20 to the Issue Price determined pursuant to the completion of the book
building process shall be
offered to the retail individual bidders.
Note: Non-resident Indians require the approval of RBI for subscribing to partly paid up equity shares,
with the copy of such
approval to be submitted along with the Bid-cum-Application form.
Payment Methods for the Issue
About the Company
PF/ IPON / 10012008 / 373 Reliance Power Limited
Reduced by 10.10%
Reliance Power Limited is a company established to develop, construct and operate power
projects domestically and
internationally. The Reliance Anil Dhirubhai Ambani Group (ADAG) intends Reliance Power to
be its primary vehicle for
investments in the power generation sector in the future.
The company was incorporated as Bawana Power Private Limited in January 1995. It was
subsequently converted to a
public limited company in March 2004 with the name changed to the present one in July 2007.
Overview of Business
The prevailing and expected electricity demand and supply imbalance in India presents
significant opportunities in the
power generation sector. The Government of India’s vision of “Power for All” by 2012 will
require aggressive growth
and increased private sector participation. To capitalize on this opportunity, the company is
currently developing 13
medium and large sized power projects with a combined planned installed capacity of 28,200
MW, one of the largest
portfolios of power generation assets under development in India.
These 13 power projects are planned to be diverse in geographic location, fuel type, fuel
source and off-take, and each
project is planned to be strategically located near an available fuel supply or load center. The
identified project sites
are located in western India (12,220 MW), northern India (9,080 MW) and northeastern India
(2,900 MW) and
southern India (4,000 MW). These include six coal-fired projects (14,620 MW) to be fueled by
reserves from captive
mines and supplies from India and abroad, two gas-fired projects (10,280 MW) to be fueled
primarily by reserves from
the Krishna Godavari Basin (the KG Basin) off the east coast of India, and four hydroelectric
projects (3,300 MW),
three of them in Arunachal Pradesh and one in Uttarakhand. The company has acquired the
two ultra mega power
projects of 4,000 MW each at Sasan in Madhya Pradesh and Krishnapatnam in Andhra
Pradesh. The 7,480 MW project
to be located at Dadri in Uttar Pradesh is expected to be the largest gas-fired power project at
a single location in the
world. The company intends to sell the power generated by these projects under a
combination of long-term and
short-term power purchase agreements to state-owned and private distribution companies
and industrial consumers.
Competitive Strengths
Company believes that it is well positioned to tap the growth opportunity in the Indian power
sector and become one of
the leading independent power producers in India, as it has: 1. One of the largest portfolios of
power generation
projects under development in India. 2. A diversified portfolio of power projects. 3.
Strategically located power
projects in the country. 4. Reliance ADA group’s experience and position in the Indian power
sector. 5. Reliance ADA
group’s brand in businesses of telecommunications, financial services, media and
entertainment, energy,
infrastructure, etc.
Reduced by 10.10%
Promoters
Individual promoter: Mr. Anil Dhirubhai Ambani
Corporate promoters: Reliance Innoventures
Private Limited (RINL), Reliance Energy Limited
(REL), AAA Project Ventures Private Limited.
Shareholdings of Mr. Ambani and RINL are jointly
held with AAA Projects.
Shareholding Pattern
89.90%
100.00%
0.00%
10.10%
0% 20% 40% 60% 80% 100%
Post Issue
Holdings
Pre Issue
Holdings
Promoters & Associates Public
Subsidiary companies
Company Name
Share-holdings
of Reliance
Power Limited
Rosa Power Supply Company
Limited 100%
Vidarbha Industries Power Limited 100%
Sasan Power Limited 100%
Maharashtra Energy Generation
Limited
100%
Urthing Sobla Hydro Power
Private Limited
80%
Tato Hydro Power Private Limited 100%
Siyom Hydro Power Private
Limited
100%
MP Power Generation Private
Limited 100%
Kalai Power Private Limited 100%
Registered & Corporate Office of the company is:
H Block, First Floor, Dhirubhai Ambani Knowledge City,
Navi Mumbai 400 710, Maharashtra
Tel: (91 22) 3038 6010 Fax: (91 22) 3037 6633
Website: www.reliancepower.co.in
Email: [email protected]
Registration Number: U40101MH1995PLC084687
Company Secretary & Compliance Officer:
Mr. Paresh Rathod
Business Strategy
PF/ IPON / 10012008 / 373 Reliance Power Limited
Reliance Power Limited aims at becoming a world class independent power producer.
Components of its business
strategy for achieving this aim are:
1. Capitalizing on the growth of the Indian power generation sector.
2. Securing fuel supplies from domestic and foreign suppliers
3. Realizing the opportunities presented by reforms in the power sector
4. Optimizing operational efficiency
5. Focusing on best practices in all business aspects
Objective of the Public Issue
Reliance Power Limited intends to use the net proceeds of this Issue for the following
purposes:
S.
No. Objective Estimated Cost
(in Rs. crore)
1 Funding subsidiaries to part-finance the construction and development costs of certain
projects of the company
8642.43
2 General corporate purposes Not Calculated
3 Issue expenses Not Calculated
Means of Finance – The above issue objectives are intended to be financed in the following
manner:
S.
No. Funding Avenues Proposed Amount
(in Rs. crore)
1 Proceeds from the public issue 10,530 to 11,700
2 Syndicated loans from banks and financial institutions 23580*
* is calculated at the rate of 1 US $ being equal to Rs.39.30
Board of Directors of Company
Mr. Anil Dhirubhai Ambani, Chairman
Mr. S. L. Rao, Independent Director
Mr. J. L. Bajaj, Independent Director
Dr. V. K. Chaturvedi, Independent Director
Dr. Yogendra Narain, Independent Director
Mr. K. H. Mankad, Whole Time Director & CEO
Particulars No. of Shares Nominal Value
@ Rs.10 / share
Authorized equity share capital * 11,00,00,00,000 1,10,00,00,00,000
Equity share capital before Issue 2,00,00,00,000 20,00,00,00,000
Present Issue 26,00,00,000 2,60,00,00,000
Equity Capital after Issue 2,26,00,00,000 22,60,00,00,000
Share Premium Account
Particulars Value (in Rs.)
Premium amount before the issue -
Premium amount after the issue Not Calculated
* excludes the authorized preference share capital of 5,00,00,00,000 shares of Rs. 10 each
Capital Structure
The key financial figures of the listed promoter group companies are:
S.
No. Company Total Income
(in Rs. Crore)
PAT
(in Rs. Crore)
EPS
(in Rs.)
Book Value
(in Rs.)
1 Reliance Energy Limited 7,774.53 834.48 38.70 386.70
2 Reliance Capital Limited 2,157.86 703.21 30.90 215.90
3 Adlabs Films Limited 428.19 90.48 22.70 84.20
4 Reliance Communications Limited 17,440.25 3530.82 17.60 112.20
5 Reliance Natural Resources Limited 250.16 29.86 0.20 8.50
The above financial figures are on a consolidated basis (except for Reliance Natural Resources Limited) for
the respective companies
for the 15 months ended March 31, 2007, except for Reliance Energy Limited and Reliance Capital Limited,
the figures for which are
for 12 months ended March 31, 2007. The financial figures for Reliance Natural Resources Limited are on
a standalone basis.
Financials of the Promoter Group Companies
Disclaimer
The information and views presented in this report are prepared by Karvy Stock Broking Limited. The information
contained herein is based on our
analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness
thereof. This material is for
personal information and we are not responsible for any loss incurred based upon it. The investments discussed or
recommended in this report may not
be suitable for all investors. Investors must make their own investment decisions based on their specific investment
objectives and financial position and
using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in
this report, investors may please
note that neither Karvy nor Karvy Stock Broking nor any person connected with any associate companies of Karvy
accepts any liability arising from the
use of this information and views mentioned in this document.
Key Concerns
Some of the risk factors that need to be taken into consideration before applying for this
public issue are:
1. Company does not have any operating history and hence it is difficult to estimate its future
performance.
2. Company's plans require significant capital expenditures and in case of its inability to obtain
the necessary funds on
acceptable terms, it may not be able to fund the planned projects.
3. Company intends to incur substantial borrowings in connection with the development of its
power projects and may
not be able to meet its obligations under these debt financing arrangements.
4. Company's operations will have significant fuel requirements and it may not be able to
ensure the availability of fuel
at competitive prices.
5. Company may not be able to establish new off-take arrangements for its power generation
facilities on terms
acceptable to it or at all. Also, the terms of these off-take arrangements may not match the
terms of its financing
arrangements.
6. Changes to power tariff regulations in India may adversely affect the results of operations
and resultant cash flows
of the company.
7. Company depends on various contractors or specialist agencies to construct and develop its
projects, including the
suppliers of sophisticated and complex machinery to it.
8. Company relies on Reliance ADA group and the group’s affiliates in certain key aspects of its
business as well as
ancillary support services.
9. As of September 30, 2007, the company has contingent liabilities worth Rs.300 crore, that
were not provided for.
10. The external risk factors include: significant competition; volatility in the price of the
shares of the company;
adverse political, social and economic developments in the country; slowdown of the economic
growth of India;
financial instability of the Indian financial markets; inflation; company’s ability to raise foreign
capital constrained by
Indian laws.
Important: PLEASE READ THE OFFER DOCUMENT / PROSPECTUS CAREFULLY
BEFORE
INVESTING.
Disclaimer for investment in this IPO by residents of USA: The equity shares of this
public issue have not been
and will not be registered under the US Securities Act of 1933 (the “Securities Act”) or any
state securities laws in the
United States and may not be offered or sold within the United States or to, or for the account
or benefit of, “U.S.
persons” (as defined in Regulation S under the Securities Act), except pursuant to an
exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act. Accordingly, the
Equity Shares are only
being offered and sold (i) in the United States to “qualified institutional buyers”, as defined in
Rule 144A of the
Securities Act in reliance on Rule 144A under the Securities Act, and (ii) outside the United
States to certain persons in
offshore transactions in compliance with Regulation S under the Securities Act.
PF/ IPON / 10012008 / 373 Reliance Power Limited