All eyes on Reliance Power IPO

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Mumbai, Feb 11: Billionaire businessman Anil Ambani will be the centre of attention on Monday, not just for India but perhaps for the stock markets worldwide, when he rings the opening bell to mark the listing of Reliance Power at both BSE and NSE. The utility, part of India's Anil Dhirubhai Ambani Group, had sold out the country's largest-ever IPO within a minute of its opening. The offering was subscribed 73 times raising hopes the shares would make a big splash on listing.

Reliance had priced the IPO at 450 rupees ($11.4) a share, at the top of an indicated band, and brokers initially said they would trade at 900 rupees -- although the company was unlikely to report strong profits for five years. But jittery global sentiment triggered by U.S. recession worries has rocked Indian markets, pushing the benchmark BSE index down 17 percent from an all-time high of 21,206.77 hit on Jan. 10.

Last week, poor market sentiment caused by the slide toppled the IPOs of Wockhardt Hospitals Ltd and a $1.6 billion issue from Emaar MGF Land, an Indian joint venture of Dubai's Emaar Properties EMAR.DU. V.K. Sharma, head of research at Anagram Stock Broking, expects Reliance Power to list 75-150 rupees higher than its IPO price.

"There will be certainly some pressure after this. People will get worried," he said after the Emaar MGF and Wockhardt IPOs were withdrawn. "And a government company, Rural Electrification Corp, is coming out with an IPO, which is also related to the power sector. So I think people would not wait and book profit."

Reliance Power was the world's biggest IPO so far in 2008, making India the largest IPO market this year to date, according to Thomson Financial. The company created many records with its initial public offer just last month. With the market conditions having changed dramatically since then, its listing is being keenly awaited — not only as a test of the investors' confidence in Ambani but also to help decide the future course of action in a highly volatile market.

This is the first IPO by the Anil Ambani group after the family settlement between him and elder brother Mukesh Ambani in June 2005. His another firm Reliance Communication which got listed at Rs 290 is currently quoted at Rs 646.10 on BSE. As far as the IPO is considered, Anil Ambani is the last man standing in the stock market arena, with Reliance Power being the last successful major public issue across the world. Having raised about three billion dollars though its public issue, the company has helped India become the biggest IPO market so far in 2008, with a total tally of $3.3 billion. It"s a big day for Anil Ambani whose mega Reliance Power IPO lists today. Even though the grey market premium has fallen sharply over the past few weeks because of the volatility, analysts still expect it to list at least 150 rupees above the offer price.

So, Monday could be D-day for 42 lakh shareholders who had put their faith in the Reliance brand. All eyes are now on Reliance IPO, when the grey market premium which has fallen sharply in the last two weeks, is still ruling between Rs 120-140/share The IPO is expected to list around Rs 600/share as against its offer price of Rs 450/share. But if Reliance Power lists below Rs 550, HNIs may have little option to sell, as it will barely cover their cost per share, given the high interest charges.

t could be the day when Anil Ambani may have to stand the litmus test of capital markets and woo retail investors. As we know Dhirubhai was known as the father of indian stock markets. Let us see will Anil Ambani confirm the famous saying 'Like father, like son' ?

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