Reliance Power Bonus Issue
- Thread starter ralph2324
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I have been puzzled by the question as to why QIBs flocked for RPower The retail portion is understandable but why the QIBs? It'd be a bit too naive to think they'd be looking just at listing gains (specially the ones with big positions & more so when many of them have been offloading since Nov-Dec, so they were well aware where mkts were likely to be at listing time), so where did they see value??
Now think what'd happen if the power business of REL were to be merged/transferred to RPower. Assuming 70% of RELs mktcap was by virtue of the power biz it'd be worth around Rs 1000/share So if this gets transferred to RPower the stock then would have a 100% upside potential from its IPO price (straightaway, without any of the assets planned for the distant future)
How can this get done? First demerge the EPC biz of REL into a separate company, then transfer the Power biz to RPower (making REL a holding company, already has 45% holding in RPower) OR, if there aren't any regulatory constraints, go for a direct merger.
(in the interim Anil Ambani would have two cash cows in the same biz space)
I think this what the QIBs are factoring in; in other words they are aware of the gameplan & what lies ahead. They also knew they'd be able to pick up the retail portion at a substantial discount post listing - this bonus is an addl icing for them.
The other brother is probably following a similar route with RPL. Eventually i think all of the petrochemical businesses will be brought under the RPL fold; the Retail biz hived off into a separate company & RIL be made a holding company for the group. (Reliance Infra may turn out to be the surprise package if they buy majority stake in another big name in the construction space. See how NAGARJUNA FERT was the first off the block on the gas-from-KGBasin story - the underlying punter assumption being 'this one's sure to get it')
Regards,
Kalyan.
Now think what'd happen if the power business of REL were to be merged/transferred to RPower. Assuming 70% of RELs mktcap was by virtue of the power biz it'd be worth around Rs 1000/share So if this gets transferred to RPower the stock then would have a 100% upside potential from its IPO price (straightaway, without any of the assets planned for the distant future)
How can this get done? First demerge the EPC biz of REL into a separate company, then transfer the Power biz to RPower (making REL a holding company, already has 45% holding in RPower) OR, if there aren't any regulatory constraints, go for a direct merger.
(in the interim Anil Ambani would have two cash cows in the same biz space)
I think this what the QIBs are factoring in; in other words they are aware of the gameplan & what lies ahead. They also knew they'd be able to pick up the retail portion at a substantial discount post listing - this bonus is an addl icing for them.
The other brother is probably following a similar route with RPL. Eventually i think all of the petrochemical businesses will be brought under the RPL fold; the Retail biz hived off into a separate company & RIL be made a holding company for the group. (Reliance Infra may turn out to be the surprise package if they buy majority stake in another big name in the construction space. See how NAGARJUNA FERT was the first off the block on the gas-from-KGBasin story - the underlying punter assumption being 'this one's sure to get it')
Regards,
Kalyan.
Reliance Power is planning to consider bonus issue for its shareholders ( retail as well as institutional ) but except the promoters. This means that the bonus issue will be for non-promoters.
Non-promoter’s holding is about 22.8 crore shares. The public shareholding is about 10.1 %. The market is expecting that the bonus share to be in the ratio of around 1:1 or 1:5 which means that one bonus share for every share or one share for every 5 shares that a person holds. If we take this ratio into consideration, the public stake holding will go up from 10.1 % to anywhere between 11.9 – 18.3 %.
The cost of acquisition of the share may come down. If the ratio is 1:5 then the QIB portion which is subscribed at about Rs. 450, it will come down to about Rs 375 and in case of retail investors, it will come from Rs. 430 to Rs 358.
If the ratio is 1:1, then it will be Rs. 225 for QIBs and Rs 215 for the retail investors. If one takes the scenario where the current share price is held around Rs. 420, then QIB portion will make a profit of about 10 % and the retail investors would make about 15 % , if the ratio is 1:5. But in case if the ratio is 1:1, they will make a huge profit of about 70 % in case of QIBs and about 78 % in case of retail investors.
But would the price be Rs. 420 ? May be not. If one is reminded of last week, many people were talking of Rs 340 or Rs. 350 to be the equilibrium price for the stock. So if one considers that particular thing, the profits for people would boil down to ratio of 1:3. So if the ratio is above 1:3 – either 1:3 or 1:2 or 1:1, then the investors would see profits in their accounts which is the main intention for the company to come ahead with this particular bonus issue.
Non-promoter’s holding is about 22.8 crore shares. The public shareholding is about 10.1 %. The market is expecting that the bonus share to be in the ratio of around 1:1 or 1:5 which means that one bonus share for every share or one share for every 5 shares that a person holds. If we take this ratio into consideration, the public stake holding will go up from 10.1 % to anywhere between 11.9 – 18.3 %.
The cost of acquisition of the share may come down. If the ratio is 1:5 then the QIB portion which is subscribed at about Rs. 450, it will come down to about Rs 375 and in case of retail investors, it will come from Rs. 430 to Rs 358.
If the ratio is 1:1, then it will be Rs. 225 for QIBs and Rs 215 for the retail investors. If one takes the scenario where the current share price is held around Rs. 420, then QIB portion will make a profit of about 10 % and the retail investors would make about 15 % , if the ratio is 1:5. But in case if the ratio is 1:1, they will make a huge profit of about 70 % in case of QIBs and about 78 % in case of retail investors.
But would the price be Rs. 420 ? May be not. If one is reminded of last week, many people were talking of Rs 340 or Rs. 350 to be the equilibrium price for the stock. So if one considers that particular thing, the profits for people would boil down to ratio of 1:3. So if the ratio is above 1:3 – either 1:3 or 1:2 or 1:1, then the investors would see profits in their accounts which is the main intention for the company to come ahead with this particular bonus issue.
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Can any one tell, If they can give Previous date(say 15 feb) as record date for this bonus shares.
Or can they say, Only those who applied for IPO and got allotment will get bonus share
Because, Idea(what they call) for bonus issue is to protect investors.
There are few ppl(like me) who had sold all alloted shares at 445 and again bought back the same share at later.
and some few others, has bought shares at price of 350 to average therey purchase price. Will all those be given bonus shares, t
then possibly we tend to gain than those who applied for iPO and keep it in dmat account.
Or can they say, Only those who applied for IPO and got allotment will get bonus share
Because, Idea(what they call) for bonus issue is to protect investors.
There are few ppl(like me) who had sold all alloted shares at 445 and again bought back the same share at later.
and some few others, has bought shares at price of 350 to average therey purchase price. Will all those be given bonus shares, t
then possibly we tend to gain than those who applied for iPO and keep it in dmat account.
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