Reliance romance : Reliance Power IPO

'Guru' is back!

Dhirubhai Ambani started the equity cult in India more than 30 years ago. More than 58,000 investors, many from the great Indian middle-class (first time retail investors!), subscribed to Reliance's IPO in 1977. Greatly rewarded were these investors, and thus began their love affair with Reliance.

What is an IPO or Intial Public Offering?
It is the first sale of stock by a private company to the public. The company is giving 'stake' or part ownership to public, in the process raising funds. IPOs are often issued by younger companies seeking capital to expand. IPOs are also offered to institutional investors like foreign funding agencies.

Reliance Power, owned by Anil Dhirubhai Ambani, is the largest ever IPO subscribed in India. It is oversubscribed by more than 70 times i.e

number of shares company is offering = 260 million (10.1% of Reliance Power)
number of shares public is ready to buy > 18200 million!!


The IPO was fully subscribed 60 seconds after it opened Tuesday. The shares were priced at 405-450 rupees.

Many first time investors sought this opportunity to enter the equity market. Road side vendors, panwalas, petty-shop keepers, painters, rickshaw-walas and thousands of factory workers have applied for Reliance Power shares. Mumbai's famous dabbawalas handed out application forms with the lunchboxes.

Reliance Power is a unit of Reliance Energy. It is developing 13 medium and large power projects with a combined planned capacity of 28,200 megawatts. Reliance Power is yet to generate a single watt of energy. The first plant will not begin production until the end of 2009.