Reliance Power Results: invests money in Mutual Funds

There is some news for the shareholders of Reliance Power shares. In the recently reported results by the Reliance Power Company, it reported that more than 98% of the money raised through the Reliance Power IPO has been invested in Mutual Funds.

Now I don’t know what to say – whether it is a good investment or a bad investment. Good, because investments in mutual funds have helped the Reliance Power company earn a profit of around 94 Crore Rs. Bad, because this is how the investors money is betted upon. Is this what investors have given the money to the Reliance Power Management for?

Interestingly, Reliance Power has not revealed which mutual funds the money has been invested. So, investors are completely blind about whether their invested money has been betted upon infrastructure related funds, or growing economy funds, or simply put into bonds based funds.

Through the IPO, a total of 11,562 Crores were raised. Out of which, 11412.81 Crores were invested in Mutual funds. That’s exactly 98.8% of the money. On this investment, the company managed to get a net return of 94.6 Crores. That’s a meager return of just 0.83%. What more can you expect from a Zero Watt Power Company, which is expected to produce real power only after 3 to 5 years. It is we investors who betted upon this stock.

The IPO offer document says that the company “intends to invest the funds from the issue in interest bearing liquid instruments including deposits with banks and investments in mutual funds. These investments may include investments in mutual funds managed or financial products sold by one of our affiliates, RCL (Reliance Capital).”

As per the news, The company has spent only Rs 25.83 crore as of March 31, 2008 in construction and development of its various projects. That’s a mere 0.22% of the IPO money actually invested.

Let’s see when actually this company produces real power and when will the investors be able to get the returns on investments. Fortunately, the book closure and record dates for the allotment date for Reliance Power Bonus shares have been finalized! (Click to know the dates). So investors can now expect to receive the bonus shares.

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Reliance Power Bonus Issue Allotment Date

Hundreds of Reliance Power Share owners are waiting for the Reliance Power Bonus issue.
After the hopeless listing of the Reliance Power Shares, the company had declared bonus shares in the ratio of 5:3, i.e., anyone holding 5 shares of Reliance Power, will be given 3 extra shares as bonus shares without any cost. This allotment will be done only to non-promoters and the promoters will absorb the loss.

Related: Reliance Power IPO Review & Reliance Power IPO Complains & Price Calculations and Adjustments for Bonus issue

Finally, the much awaited news for Reliance Power Bonus issue allotment date has arrived.

As per the news, Reliance Power Limited today announced date of closure of its Register of Members from Tuesday, June 3, 2008 to Thursday, June 5, 2008 for the purpose of determining the entitlement of shareholders to the Bonus shares to be issued by the Company.

As approved by the shareholders of the Company, Reliance Power will issue Bonus shares in the ratio of three new equity shares of Rs 10 each for every five existing equity shares of Rs 10 each held, to the public shareholders of the Company.

The bonus shares will be issued to those shareholders whose names appear in the Register of Members as at the end of the close of business hours on Monday, June 2, 2008.

And what have the Reliance Power management done with the money raised through the Reliance Power IPO? They have invested it into Mutual funds. Interesting!

Still more than a month to go….don’t expect any miracles and sudden jump in prices.

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Check Reliance Power IPO Allotment Status here (Links)

Here is the link for the people who want to check the status of their application to the Reliance Power IPO application.

Direct link is: http://www.karvy.com/ipostatus/ (Opens in a new Window)

Otherwise, you may also visit Karvy home Page and click on the Reliance Power IPO Allotment Status Button in the Center Top.(Opens in a new Window).

Wockhardt Hospitals & Emaar MGF cut IPO Prices

The market is setting more and more examples everyday about how everything depends upon the market situation and how helpless an investor as well as the big companies become when the timing is bad.

After so many stop-payments of cheques for Reliance Power IPO and so much speculation going on about the listing price of Reliance Power IPO – expectations generated from Grey market trading prices of Reliance Power IPO shares – it’ the turn of other companies to feel the heat in the IPO business.

In my review of Reliance power IPO, I had clearly mentioned the possible dangers of companies overpricing the stocks following the euphoria they see by the investors in the stock market. However, when things start to go from bad to worse, the same companies as well as the investors wake up to the senses, finally falling victims to the stock market timings.

The latest news to add to this IPO business is that two major IPO’s - Wockhardt Hospitals& Emaar MGF have slashed down their IPO prices significantly.

Wockhardt Hospitals Limited today said that it has lowered the price band of its initial public offering to Rs 225-260 per equity share.

The revision has been done in the light of current market conditions, the company said in a press release issued on Thursday.

The company had earlier fixed the price band for its IPO at between Rs 280-310 per equity share. The issue opens on Friday and closes on February 5.

Initially, the trade analysts were already of the view that the company has overpriced its IPO.

Other news is about EMAAR MGF:

Emaar MGF Land, which had planned to raise up to $1.8 billion in an initial public share offer in India, has cut its offer price a day before opening, becoming the second company to trim its issue because of market volatility.

The company said on Thursday the IPO price range, initially set at 610 rupees to 690 rupees ($15.50 to $17.50) per share, would be reduced to 540 rupees to 630 rupees ($13.7 to $16), cutting the maximum it can raise to $1.64 billion rupees.

What has gone wrong with these 2 companies? Have they lost their business or values or research or market in just past 1 month? No, it’s all dependent upon the market situation. The timing is bad, so is the anxiety of the investors. Everyone falls victim to market timings and the past month has proved to be a typical case of it. Nothing is certain, you apply for an IPO just 10 days back, within these 10 days, things turn from good to bad to worse. You can only observe the so called good company becoming a bad company (in stock market timings) or loosing significant value.

Markets give returns only in the long run. Today is the listing of Future Group Holding IPO. I hope the listing price of Future Group Holdings IPO is good enough to keep the investors faith. Wishing all the subscribers the very best of luck.

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Reliance Power IPO Listing Price expectation-Grey Market Trading Premiums

The markets are going ga-ga up and down, round and round, with no clear picture in sight at the moment. However, it’s also the time when the much awaited listing of Reliance Power is just about to happen in next few days with the allotment status already declared and the allotment expected to be completed this week.

What are the expectations from the Reliance Power IPO, what can be the listing price of Reliance Power IPO stock, what is the trading rate in the grey market for the Reliance Power IPO shares? Let’s see some of the news items related to these questions.

Investors who had invested their money are sitting with big hopes of getting a huge premium and a quick profit making opportunity. However, they are put off by the currently trading grey market premium of the Reliance Power IPO stock or shares.

Unfortunately, the grey market premium for the Reliance Power IPO that has been observed to see a continuous decline since the issue was brought to the markets. As per the news, the last seen grey market price of Reliance Power IPO stock was hovering around the Rs 150-160 level, i.e. against the issue price of 450, the total trading price in the grey market is around 600-610 only. This is in way short of the initially traded prices in the beginning days when the premium was more than Rs 450 or the trading price of 900 Rs. a share.

Here is the news that can be heard on business news channels and different news websites:
According to grey market dealers, there are people who are ready to sell their shares at a premium of Rs 150 but are not able to do so for the lack of buyers. “There are hardly any buyers in the market,” said a source. “While we may blame the global liquidity crisis for all the problem, the bottomline is that retail investors and HNIs have taken a hit,” he added.


Grey market refers to an over the counter market, where shares are traded before they are actually listed on the bourses. Interestingly, while the premium in this unofficial market cannot be taken as a benchmark for determining listing gains, it is always considered to be an important factor.


The premium plays an important role especially for investors, who borrow money to invest in public issues. The quantum of listing gains has to be more than the borrowing costs to make it a profitable proposition. Such costs cover the interest charged for borrowing money, which could be as high as 40-50% in a booming market.


Interestingly, it’s not only the Reliance Power IPO shares the only issue that have taken a hit. There are quite a few ongoing IPOs and some in the pipeline that are facing difficult times. The grey market premium for Shriram EPC is around Rs 30. Similarly, the premium of OnMobile Global is between Rs 30 and Rs 40. OnMobile was given a Crisil IPO grade of 4 indication ‘above average fundamentals.’

Issues like IRB Infrastructure, Bang Overseas, Cords Cable and J Kumar Infraprojects have all witnessed a fall in their respective grey market premium. However, sources say that Future Capital Holdings proved lucky with its premium remaining above the Rs 300 mark. The issue price has been fixed at the upper end of the band at Rs 765.

Interestingly, market participants are still of the opinion that the listing of Reliance Power will be a big event. “A huge premium or not, the whole nation will be glued to the screen when the stock lists on the bourses,” said a dealer with a domestic brokerage.

However, with the overall sentiment in the secondary market turning bearish, the issue took a hit with even reports of many investors issuing stop payment instructions to their banks. This is a good example (better to say a good lesson) for all the investors who believe that the so-called good companies, with great fundamentals are sure to make a faboulous listing on the listing day. It all depends upon the existing market situation, even good companies take a hit and even bad companies hit the jackpot. Anyways, the above mentioned details are only news items and no one can predict what can happen in the future. Let’s hope that the listing of Reliance Power IPO is a good one. All the best!!

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Reliance Power IPO Allotment Status

After the review of the much awaited Reliance power IPO, here is the news about the allotment status of the reliance power ipo applications.

A total of 43 lakhs or 4.3 million applications were received from the investors by the so-far largest IPO in Indian capital market history subscription. But each investor, who has applied for the issue, will get only 15 shares each in IPO. The retail investors who had applied for the maximum available limit of 225 shares, will receive only 15 shares each. Interestingly, anyone who applied for less than 225 shares, or less than the available maximum limit, will NOT receive a single share.

In total, 4 lakh investors who have applied for less than 225 shares, will not get any allotment. Another 3 lakh applications were disqualified on the basis of incorrect applications or entries.

Share allocation process is underway and will end on Thursday. The good news is that excess share application money refund will begin on Friday. So people who have opted for ECS refund can expect the money to be credited to their bank accounts by this weekend.

As per the news: Reliance Power, Anil Dhirubhai Ambani Group Company, had come out with an IPO of 22.8 crore shares with face value of Rs 10 each at a price band of Rs 405-450. Its issue had received an excellent response and subscribed 73.04 times and received bids worth about Rs 7.5 lakh crore.


Direct link is: http://www.karvy.com/ipostatus/ (Opens in a new Window)

Otherwise, you may also visit Karvy home Page and click on the Reliance Power IPO Allotment Status Button in the Center Top.(Opens in a new Window).

The reserve portion of QIBs subscribed 83 times and non institutional investors 190 times and retail nearly 15 times. The issue received bids for 16.65 billion equity shares as against 22.8 crore shares on offer. The company raised nearly Rs 10260 crore from this public issue excluding promoters’ contribution. Wishing all the applicants and the investors who received the shares a very happy and profitable listing of the Reliance IPO shares on the IPO listing day.

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