Reliance Power Puts IPO Money In Mfs

Mumbai: Reliance Power Ltd, which raised Rs 11,562 crore in its IPO in January last, has temporarily parked almost the entire money in mutual funds.

The 2007-08 financial results declared by the company on Monday show that Rs 11,412.81 crore is invested in mutual funds. The company has not disclosed either the funds or the schemes where the money has been invested.

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).”

The company has spent only Rs 25.83 crore as of March 31, 2008 in construction and development of its various projects.

The temporary parking of the IPO money in mutual funds has helped the company report a net profit of Rs 94.6 crore for 2007-08. Total income for year stands at Rs 132.8 crore, of which dividend income is Rs 112.7 crore.

The company has also informed that from March 31, Coastal Andhra Power Ltd, Reliance Coal Resources Pvt Ltd, Sasan Power Infrastructure Pvt Ltd, Sasan Power Infraventures Pvt Ltd, Maharashtra Energy Generation Infrastructure Ltd and Coastal Andhra Power Infrastructure Ltd have been incorporated as wholly owned subsidiaries.

On the BSE, the scrip was traded at Rs 403.25, an increase of 0.27 per cent over the previous closing of Rs 402.15.

IPO Scam: Relief On The Cards

MUMBAI: A couple of years back, thousands of small investors who had flocked to IPOs found no shares coming their way. Reason: A clutch of operators had cornered the shares meant for them. Now, after a detailed regulatory probe and a committee to resolve the issue, the modalities to compensate these investors are nearly final.

Capital market regulator Securities and Exchange Board of India (SEBI) is set to issue caonsent orders to settle the enforcement action it had initiated against entities responsible for cornering shares meant for retail investors in 21 IPOs in 2005-06. By settling the proceedings against those who had allegedly violated securities laws, the regulator will be in a position to disgorge the gains made by them.

The shares of these operators, which have been frozen by the depositories, will be sold and the proceeds utilised to compensate retail investors who had applied for shares in IPOs such as IDFC, Jet Airways, NTPC and Suzlon Energy.

A SEBI probe blew the lid off the scam in 2006. The investigation showed that in 2005-06, a clutch of operators had filed thousands of fictitious applications in several IPOs, posing as retail investors. Thousands of bank and demat accounts were opened in the names of fictitious individuals to facilitate the plan. Once the scam came to light, depositories froze these shares on SEBI’s orders.

Once they were allotted shares, the operators transferred these shares to another set of players, who in turn, passed them to financiers who had provided the funds for investing in the IPOs. These shares were sold on the first day of listing, helping these operators reap a windfall — the difference between the IPO price and the listing price.

The value of the frozen shares is estimated at Rs 60-90 crore. A committee headed by Justice Wadhwa, which was appointed by SEBI to work out an equitable method for compensating retail investors, had come up with a figure of Rs 92 crore. The figure was based on the closing price of stocks of 21 IPOs on listing day.

The committee had said that retail applicants who did not get anything should be paid the difference between the offer price and the closing price on listing day. According to the committee, the differential could be taken as a proxy for the unjust gains made by the scamsters, who cornered shares meant for individual investors.

Thai Water Firm IPO Price Range 4.0-4.5 Baht: Source

BANGKOK: Thai utility Tap Water Supply (TTW) has set a price range of 4.0-4.5 baht per share for its initial public offering, a source close to the deal said on Saturday.

The company is planning to sell 1 billion shares so the IPO would raise 4.0 billion baht to 4.5 billion baht ($126 million to $142 million).

The IPO shares would be offered to investors on May 12-13, the source told Reuters. "The IPO debut on the Thai bourse should be on May 22," he added ahead of a news briefing on the IPO details on Monday

BSNL Says IPO Has Been Put On Ice

It's official now: state-owned telco Bharat Sanchar Nigam Ltd's IPO plan has been put on the backburner.

BSNL chairman and managing director Kuldeep Goyal said, "We will do it when there's need for funds," when speaking to media on the sidelines of a conference here on Thursday.

Earlier this year, BSNL had indicated that a float was in the offing which could raise as much as Rs 40,000 crore.

The announcement created much buzz as it would have been India's largest IPO.

Subsequently, the BSNL employees' union protested against the plan, and even communications minister Andimuthu Raja gave a statement saying that talk of an IPO was premature.

Meanwhile, BSNL is planning to start CDMA (code division multiple access) service in a big way across the country by the end of this financial year.

It already has 4.5 million CDMA (though not full mobility) subscribers, and expects to add another 2.5 million by the year end.

In GSM (global systems for mobile communications), it has 36.2 million subscribers, and hopes to add 17 million by the year end.

Currently, if both wireline and wireless subscribers are taken into account, BSNL has the largest user base in India at 72 million.

When asked to explain his long-term strategy on GSM and CDMA and how the two would pan out in terms of numbers, Goyal said, "the bulk of our mobile subscribers would continue be GSM users."

As to when BSNL would enter the important markets of Delhi and Mumbai, Goyal only said, "not now."

While BSNL operates across the country except in Delhi and Mumbai, the other public sector telco, MTNL, is present only in Delhi and Mumbai.

On the BlackBerry service, Goyal pointed out that BSNL would launch it only when the controversy is resolved over security issues. At present, Bharti, Vodafone, Reliance Communications and BPL offer BlackBerry. Tata Teleservices is also waiting to launch the BlackBerry service. But, DoT and makers of BlackBerry, Research In Motion, are in talks to resolve the security concerns related to use of the device.

New IPO Application Forms To Avoid Manual Intervention

New Delhi: SEBI’s Primary Market Advisory Committee (PMAC) has given an in-principle nod for initiating steps to ensure “no manual intervention” in the primary market issuance process.

The Minister of State for Finance, Pawan Kumar Bansal, said in a written reply in the Rajya Sabha today that the PMAC has endorsed the suggestions of the Group on Review of Issue Process (GRIP) on this matter. GRIP had recommended modified application forms that can be submitted physically as well as electronically.

For transparency

“These measures will enable faster and transparent processing of application forms leading to a reduction in the time gap between closure of an IPO and its listing,” Bansal said.

Indications are that the proposed measures would be placed for approval before the SEBI Board, as part of reform process on the primary market. SEBI had advised the PMAC to review the entire issue process with an objective to reduce the time gap between closure of an IPO and its listing.

Capital gains tax

Meanwhile, the Government has made it clear that the central board of direct taxes has not sought any amendments to the Income Tax Act, so that all foreign institutional investors (FII) pay capital gains tax on their profits in India.

“Taxation of capital gains of FIIs is provided for in the Income Tax Act 1961 read with the relevant double taxation avoidance agreement,” S.S. Palanimanickam, Minister of State for Finance, said in a written reply in the Rajya Sabha.

FIIs are allowed to participate in the Indian stock markets. The Government, the RBI and SEBI have framed a policy for such participation.

Kiri Dyes And Chemicals Makes Debut At Premium

Kiri Dyes and Chemicals gets listed at a premium of 22.66% at Rs184 on National Stock Exchange (NSE) as against the issue price of Rs150 per share. After that the stock grew to touch a high of Rs228.70. AT 10.45 AM, it was trading at Rs179.20 up by 19.47%. The total traded quantity reported was 3092831 and the turnover reported was Rs5919.99. On BSE it touched a high of Rs204 and low of 151 to trade at Rs178.40 at 10.45 AM.

UTI Mutual IPO Dicey, Rider Curbs Placement

The uncertainty in the secondary markets is holding back UTI Mutual Fund from going ahead with its proposed public issue — the first ever by any asset management company in the country.

Curiously, its other fund-raising option — a pre-IPO placement of shares — is also far from taking off, tied as it is by a clause to option one.

"With prices not stabilising, the pre-IPO placement that was supposed to happen in December 2007 is also in a tangle," said a fund official.

According to the draft red herring prospectus (DRHP) filed by UTI Mutual Fund in January, the government has asked the country's third-largest asset management company by assets under management (AUM) to make a fresh issue of 1.6 crore shares by way of a private placement to qualified institutional investors, including existing shareholders (LIC, SBI, PNB and BoB), Indian institutions and a few foreign institutional investors.

This would take its total share base to 14.1 crore shares, thus taking the stake sale to the public through the IPO (4.85 crore shares) and private investors through the pre-IPO placement (1.6 crore shares) to 51% of the company.

The IPO has been marred by investor apathy towards fresh issues, brought on by the poor showing of the secondary market in the past three months.

The pre-IPO placement, on the other hand, has stalled because of a government specification that the issue of fresh shares to private investors should be made on the condition that the allottees will match the price discovered through the offer.

"The price at which such equity shares shall be issued under the private placement will be within the price band or above the higher end of the price band to satisfy the conditions mentioned in the ministry of finance letter," says the DRHP.

With no indication of where that price band will be, potential pre-IPO investors have stayed away.

Sources said UTI MF has narrowed down on 10 potential investors from an initial list of around 20. However, they declined to give away specifics.

The DRHP indicates that these investors will be identified prior to the filing of the final red herring prospectus with the registrar of companies.

UTI Mutual Fund had an AUM of Rs 48,983 crore as at end-March, 2008, behind Reliance Mutual Fund's Rs 90,938 crore and ICICI Prudential Mutual Fund's Rs 54,322 crore.

IPO Closing Today

1.Aishwarya Telecom Ltd.

Opening Date:15/04/2008
Closing Date:17/04/2008

IPO Opening Today

1.Aishwarya Telecom Ltd.

Opening Date:15/04/2008
Closing Date:17/04/2008

Lodha Group Plans To Come Out With IPO

Lodha Group, promoted by Mangal Prabhat Lodha, the real estate developer plans to come out with initial public offering to raise Rs8,000 crore from the primary market for the expansion of its business to enter new markets Pune and Hyderabad and to fund various projects. The company is planning to raise this amount in the third quarter of this fiscal. The company is currently developing 27% profile that consists of 60% residential projects, 30% commercial and 10% retail.

The Lodha Group of Companies is one of India 's premier real estate developers - with bigger and more challenging projects added each year. Today, the Group provides stylish and comfortable living to over 12,000 families across Mumbai - from South Mumbai to the suburbs.

The Lodha Group is developing residences, malls, IT parks & weekend retreats -spanning a total development of over 72 lakh sq. ft. across prime locations such as Napean Sea Road , Worli Sea Face, Mahalaxmi, Prabhadevi, JVPD, Thane and Kanjurmarg. Its upcoming projects include developments at Walkeshwar, Bhandup, Mulund, Dombivili, Dahisar, Thane and Lonavala.

India Inc Raises Rs 17,000 Cr Via Ipos In Q4 '08: Assocham

Funds mobilised by India Inc through initial public offerings has doubled to Rs 17,217 crore in the fourth quarter of last fiscal as against a year ago period, industry body Assocham said.

"Even as the number of primary market issues declined to 19 in January-March 2008 from 33 for the corresponding period of the last year, the amount raised in the initial public offer market doubled with 120.68 per cent rise," Assocham Eco Pulse (AEP) study on 'Primary Market Performance' said.

The study conducted for the fourth quarter of FY08 has revealed that despite the bearish conditions in stock markets and credit crunch, the total money raised from the IPO market has more than doubled to Rs 17,217 crore from Rs 7,749 crore in the same period during FY07.

The mega issue of Reliance Power (Rs 10,260 crore) accounting for 60 per cent of the IPO value raised during the period and rise in the overall stock market valuations were the main reasons cited by the AEP, for more than double increase in the money raised from the primary market.

The sectors, which registered maximum growth in last three months over the corresponding period of the fiscal 2007, were power, construction and financial services, Assocham President Venugopal Dhoot said.

The construction sector gathered a significant Rs 4,454.77 crore, despite two companies withdrawing their offer in the period, the chamber said.

The construction sector contributed a share of 25.87 per cent in the total IPO proceeds during the period January-March 2008, it added.

IPOs in power sector were dominated by the mega issue of Reliance Power, which raised Rs 10,260 crore.

The study was based on the data taken from Bombay Stock Exchange, National Stock Exchange, SEBI and respective companies websites, it said.

Not A Bad Time For Ipos, It's Price That's The Problem: Bhave

MUMBAI: Securities and Exchange Board of India (SEBI) chairman CB Bhave on Tuesday lambasted merchant bankers and promoters for being “greedy”, while speaking at an IPO seminar. According to Mr Bhave, the decline in the Sensex from 21,000 points to 15,000 points does not necessarily mean that it is a bad time for initial public offerings. “Is it really a bad time for IPOs, or is it the price?” the regulator questioned.

Mr Bhave said that during his interaction with merchant bankers, he was told that the promoters are greedy. But according to him, even merchant bankers are equally greedy. On the need for further reforms in the primary market, Mr Bhave said the regulator was looking to change the way in which investors subscribe to public issues. He said investors should pay only for the shares allotted to them and not have to wait for refunds. “There is no reason why an investor’s money should leave his bank account when he is not assured about allotment of shares. Technology will enable us to do that,” Mr Bhave said.

He said that he has asked the intermediaries to operationalise it on a voluntary basis. “What do you do with this money for 21 days?” he questioned. The regulator is mulling an instrument which would be blocked by the bank for the full application amount till the shares are allotted. The amount would continue to remain in the client’s account but would not be available for withdrawal or cheque payment.

It would, therefore, continue to earn interest in the intervening period. On receipt of advisory from the registrar about the allotment of shares, the bank would release the amount equal to the cost of total number of shares the client has been allotted. The move would apply to both physical and electronic applications.

Though it may take a while to implement the same, early availability of funds would help the investors from facing any liquidity shortage. The new measures are aimed at making the IPO process more efficient and transparent. Sebi chairman also said that regulator is making efforts for a more vibrant market for small and medium enterprises.

Sebi modifies Clause 49

Sebi has modified Clause 49 — relating to independent directors — by including some mandatory and non-mandatory provisions. According to a Sebi circular, at least one-half of the board of the company should consist of independent directors if the non-executive chairman is a promoter or is related to promoters or persons occupying management positions at the board level or at one level below the board.

Another mandatory requirement of Clause 49 would be that relationships between directors would have to be disclosed in specified documents/filings. While the minimum age for independent director has been fixed at 21 years, the regulator does not want the gap between removal of an independent director and the appointment of a new one to exceed 180 days.

However, this provision would not apply in case a company fulfils the minimum requirement of independent directors in its board (one-third or one-half as the case may be) even without filling the vacancy created by such resignation/removal.

Among the non-mandatory provisions, Sebi wants companies to ensure that the person who is being appointed as an independent director has the requisite qualifications and experience, which would be useful to the company and that he can contribute effectively in his capacity as an independent director.

The market regulator has asked all stock exchange to make the necessary amendments to the listing agreement to include the said modifications. Further, stock exchanges have been advised to “communicate to Sebi, status of implementation of the requirements of this circular in the next Monthly Development Report”.

“There is no reason why an investor’s money should leave his bank account when he is not assured about allotment of shares. Technology will enable us to do that,” Mr Bhave said.

He said that he has asked the intermediaries to operationalise it on a voluntary basis. “What do you do with this money for 21 days?” he questioned. The regulator is mulling an instrument which would be blocked by the bank for the full application amount till the shares are allotted. The amount would continue to remain in the client’s account but would not be available for withdrawal or cheque payment.

It would, therefore, continue to earn interest in the intervening period. On receipt of advisory from the registrar about the allotment of shares, the bank would release the amount equal to the cost of total number of shares the client has been allotted. The move would apply to both physical and electronic applications.

Though it may take a while to implement the same, early availability of funds would help the investors from facing any liquidity shortage. The new measures are aimed at making the IPO process more efficient and transparent. Sebi chairman also said that regulator is making efforts for a more vibrant market for small and medium enterprises.

CARE Assigns 'IPO Grade 4' To DB Corp

MUMBAI: CARE assigned 'CARE IPO Grade 4' to the proposed initial public offer of DB Corp Ltd, which indicates above average fundamentals.

The grading factors in the company’s long experience in print media, track record of promoters and strong brand name of the publications. It also takes into account well diversified geographical presence and growth prospects of the industry.

However, the grading is constrained by the risks associated with expansion in newer territories and its impact on the overall profitability of the company.

DB Corp is planning an IPO of 188 lakh equity shares of face value Rs 10 each. The company publishes five newspapers – Dainik Bhaskar, Divya Bhaskar, Saurashtra Samachar and on a franchisee basis, DNA Money and DNA.

Its flagship publication, ‘Dainik Bhaskar’ is present in various states like Madhya Pradesh, Chattisgarh, Rajasthan, Haryana, Punjab, Chandigarh and enjoys highest readership in most of the territories. DB Corps Gujarati newspaper ‘Divya Bhaskar’ is the highest circulated Gujarati daily in that state.

The company also publishes five periodicals.

In addition to the newspaper and publication businesses, DB Corp through its subsidiaries operates an FM radio and internet portals which contain editorial content from daily editions of the company’s newspapers in the form of e-papers.

The promoters of DBCL are into print media business since four decades. The promoter group combined own 92.86 per cent of the total share holding of DB Corp and Cliffrose Investment --an affiliate of Warburg Pincus--owns the remaining 7.14 per cent.

The IPO will constitute 10 per cent of the fully diluted post-issue equity share capital of DB Corp. Proceeds from the issue are intended to be deployed towards expansions, modernisation of plant and machinery, repayment of working capital loans, prepayment of term loans and other general corporate purpose.

BSE Speeds Up Its IPO Plans

The country''s leading bourse Bombay Stock Exchange (BSE), is speeding up its initial public offer plans. Asia''s iconic exchange believes that it is not about money but more about providing liquidity to its investors. The trading of shares will start once BSE gets listed on its own platform. There are certain models by global players; we are working in tandem with SEBI for guidelines, said Rajnikant Patel, MD & CEO, BSE. This listing can prove to be unique in many ways as BSE will list without offering any new shares to retail investors through an IPO. It is sitting on enough cash reserves to fund its capex needs. The Bombay Stock Exchange on Friday launched trading of Sensitive Index-based Futures on the US Futures Exchange (USFE) in Chicago. The IPO process might be completed very soon if everything goes smoothly.

NHPC Mulls To Float IPO In Second Quarter

National Hydroelectric Power Corp Ltd (NHPC) is mulling to float an initial public offering in the second quarter of the current financial year. NHPC, which has a paid-up capital of Rs 11,500 crore, is expected to launch a public offer of 167 crore shares , which would add 10 per cent as fresh equity besides five per cent disinvestment. The shares would be face value of Rs 10 each.

NHPC Says IPO In 2nd Quarter Of 08/09

NEW DELHI: India's state-run National Hydroelectric Power Corp Ltd (NHPC) plans to launch an initial public offering in the second quarter of the financial year ending March 2009, a top company official said on Thursday.

"We will be going to the market shortly. We are planning an IPO during the second quarter of this fiscal," S K Garg, chairman and managing director, said at a industry conference.

He said the company plans to add 4,000 megawatts of capacity by 2012.

IPO Closing Today

1.Kiri Dyes And Chemicals Ltd.

Opening Date: 25/03/2008
Closing Date : 02/04/2008

Kiri Dyes IPO Subscribed 0.80 Times

MUMBAI: The initial public offer of 37.5 lakh equity shares of Kiri Dyes and Chemicals was on Tuesday subscribed 0.80 times up to 5 pm, as per the NSE website.

The issue received 29,92,140 bids. Around 2,14,650 bids were received at cut off price.

The company has fixed a price band of Rs 125-Rs 150 per share. The issue constitutes 25 per cent of fully diluted post issue paid up capital. The issue closes April 2.

The qualified institutional investors' portion of 18,75,000 shares was subscribed 0.92 times, while 5,62,500 shares allocated to non-institutional investor received 0.59 times subscription. However, the retail portion was subscribed only 0.07 times of the 13,12,500 shares allocated to them.

The company has made pre-IPO placement of 12,50,000 shares comprising 1,31,140 shares at Rs 120 and 11,18,860 shares at Rs 115 per share.

RITES Files Papers For 14-Mn-Share IPO

MUMBAI: State-run RITES Ltd has filed documents with the markets regulator for an initial public offer for 14 million shares, the company said on Tuesday.

The book-built issue comprises of fresh issue of 10 million shares, and sale of 4 million shares by the federal government, according to the filing. Post issue, the government's stake will come down to 72 per cent from 100 per cent now, the company said.

The company did not specify the size of the issue, but banking sources said the company could raise up to 4 billion rupees through the offer.

RITES, which functions under the railways ministry, operates as a consultancy focussed on the transport, infrastructure and related technologies.

The company has experience on projects in 62 countries around the world. The public offer is the latest in a series of divestments in state-run companies by the federal government.

Last month, state-run Rural Electrification Corp raised 16.4 billion rupees through a 156-million-share public issue that was subscribed 27 times.

Kotak Mahindra Capital, Enam Securities and ICICI Securities are the book-running lead managers to the RITES issue.

All IPOs May Now Come With Underwriting Cover

NEW DELHI: Underwriting could become mandatory for the initial public offers (IPOs). The proposal is part of the initiatives which are under consideration of the market regulator to discipline the primary market and ensure quality paper.

An underwritten issue, it is understood, would also give confidence to investors that the issue has been vetted by domain experts after considering the risk factors. It could help obtain better pricing as institutions would not want to underwrite issues that are over-aggressively priced and run the risk of devolving substantially. The move comes in the backdrop of some of the big IPOs - Emmar MGF, Wockhardt etc - being called off. In February, these issues were called off by the promoters after failing to woo investors following cut in price band and extension of deadline.

The proposal has already been given an in-principle go-ahead by the Primary Market Advisory Committee, which is at present discussing the issue of making the IPO process more efficient and transparent. The nitty-gritty of its implementation, however, is yet to be firmed up, sources told ET. However, the proposal will finally have to be cleared by the SEBI board before it is implemented.

"If an issue is not able to get subscription, the underwriter should come forward to subscribe it. Why should an issue be called off or dates extended? The move is in the overall interest of the investor and markets. It would ensure that only quality paper comes to market," Association of NSE Members of India past president KL Garg said.

At present, underwriting is optional and bankers prefer soft underwriting in which the underwriter agrees to buy the shares at later stages of the offer, after book-building is complete and pricing has been done. Moreover, the underwriter has to put in money only if investors after bidding for shares default in payment on allotment.

During the Controller of Capital Issues regime, hard underwriting in which the underwriter agrees to buy shares at its early stage prior to the opening of the issue was compulsory. Even after free pricing was introduced under Sebi regulations, hard underwriting was mandatory in the first few years.

Experts feel that mandatory underwriting will increase issue expenses, because of the underwriting fee that would have to be paid to underwriters, but it would make the issue safe for the issuer. The total cost of an issue ranges from 0.5% to 3% of the issue size depending on the size. It is less for bigger issues and more for smaller issues. Since failed issues disturb the market, the proposal is good for the overall health of the market.

Former BSE VP, Deena Mehta, says: "In exchanges we have a trade to guarantee fund which is there to ensure that every trade will be honoured by the exchange. If this is the kind of discipline we are trying to bring in into the primary market, it would be great."