Mumbai, Feb 4: Fresh from the massive success of the Reliance Power IPO, the Reliance Anil Dhirubai Ambani Group today filed the Draft Red Herring Prospectus (DRHP) for another group company, Reliance Infratel, to float an equity of 89.16 million quity shares of Rs five each for cash at a premium to be decided through a 100 per cent book building process. The issue would constitute 10.05 per cent of the post issue paid up equity capital of the company, a subsidiary of Reliance Communciations.
Reliance Infratel is in the business of building, owning and operating telecommnciation towers and related assets at designated sites and to provide these passive telecommunication infrastructure assets on a shared basis to wireless service providers and other communications service providers under long-term contracts. These customers use the space on the company's telecommunication towers to install their active communication-related equipment to operate their wireless communications networks.
The issue proceeds are proposed to be utilized to finance the development of passive infrastructure sites and for general corporate purposes. The equity shares of the company are proposed to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
At least 60 per cent of the issue to the public shall be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs), of which five per cent shall be available for allocation to Mutual Funds only and the remaining QIB portion shall be available for allocation to all the QIB bidders, including mutual funds, subject to valid bids being received at or above the issue price. Further, not less than 30 per cent of the issue shall be available for allocation on a proportionate basis to the Retail Individual Bidders and not less than 10 per cent of the issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid bids being received at or above the issue price.
Media reports about the proposed IPO saw a spurt in the scrips of Reliance Communications, recording a 5.95 per cent increase at Rs 648.20 in early trade of BSE. On the BSE, 8.49 lakh shares of the scrip were traded. The stock had an average daily volume of 16.10 lakh shares on BSE in past one quarter.
The stock had hit a 52-week high of Rs 844 on January 10 and a 52-week low of Rs 371.25 on March 16 last year.
The scrip had underperformed the market in the one month to February 1, falling 16.59 per cent as against the Sensex's 10.33 per cent decline. It had also underperformed the market in the past three months, slipping 22.13 per cent against the Sensex's 8.68 per cent slide.
Reliance Communications is the country's second largest listed telecom firm by sales and has an equity capital of Rs 1032 crore with the face value per share being Rs five.
Reliance Telecom Infrastructure, which owns about 25,000 mobile towers, plans to expand them 40,000 by March and to 60,000 a year later, Chairman Anil Ambani had said in an investor conference call last week.