Anil Ambani pledges shares to all retail investors

Sunday, January 20, 2008

Anil Ambani pledges shares to all retail investors

It may have been a chance remark. Said at the spur of the moment without contemplation. On the other hand, it may not have been so on-the-spot. Just hours after pulling off the largest ever IPO subscription in global capital market history, Anil Ambani, chairman of ADAG, was at a press conference tackling the ticklish question of whether he is likely to overtake elder brother Mukesh Ambani in the richest Indian sweepstakes.

“The media seems to be more interested in this than anybody else. In any case, if you look at Indian history, the elder brother always stays ahead in the race,” Mr Ambani quipped.

A short look at numbers will tell why Mr Ambani can afford to be in a jocular mood. Two years after being formed, the Reliance ADA group is likely to emerge as the country’s second-biggest business group with a market cap of $100 bln (which includes Reliance Power listing at the IPO price of Rs 450 per share).

His own personal wealth has also been trending skywards and is set to rocket further after the Reliance Power listing. Reliance Power’s market cap alone is set to be more $25 bln, making it one of India’s biggest companies.

A day after creating history by attracting bids for shares worth over Rs 7.5 lakh crore for its IPO, Anil Ambani’s Reliance Power is now working on allotment of shares to maximum number of retail investors.

“Our endeavour is to allot shares to each and every retail shareholders who have applied for the IPO. On listing, Reliance Power will be amongst the top 10 listed companies in India and will have the largest shareholders across the world,” he told on Saturday.

This will be the second bonanza for the 50 lakh retail investors who have applied for a slice of the $3 billion IPO, largest maiden issue in the Asia Pacific power sector. The first one was a Rs 20 discount on the sale price. The issue price is fixed at Rs 450 a share and it is expected to be listed in early-February on the stock exchanges.

Mr Ambani’s penchant for retail investors is well-known. On the day of kick-starting the road show for the IPO, he had said he would have sold the entire issue to retail investors, had it been allowed. Even in that case, the issue would have subscribed four times.

In addition to the record participation by retail investors, the issue created a whole lot of new milestones. For instance, it got subscription worth over $100 billion from foreign investors, which is nearly 40% of India’s current forex reserves. The entire foreign institutional investors’ (FIIs) contribution to the Indian market was $20 billion last year. As many as 500 domestic and international QIBs (qualified institutional bidders) applied with a combined $125 billion, another new high in India.

“Record subscription achieved in the midst of global and domestic meltdown in stock markets during the week. The Dow Jones index has fallen 4.2%. London index fell down 4.1%. Hang Seng witnessed a 4.8% fall. During this period Sensex has fallen 8.3%. We appreciate the confidence of the investors in Reliance Power,” said Mr Ambani.

At Rs 450 a share, the market cap of the company works out to be $25.88 billion, taking the total M-Cap of the group to $100 billion. This will make it the second largest group in terms of M-Cap, overtaking the Tata Group.

Interestingly, the group’s M-Cap was just $4 billion when it was born out of a de-merger of the Reliance group in June, 2005.

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