| Mukesh: Think big
Mumbai, April 5: Reliance Petroleum Limited (RPL) today announced a price band of Rs 57 to Rs 62 per share for its initial public offering (IPO), which will open on April 13. The issue size has been trimmed to 135 crore shares from 180 crore following a pre-IPO allotment to institutional investors.
At the upper end of the price band, RPL will be valued at around Rs 28,000 crore as it will have a total equity of 450 crore shares. Reliance Industries will subscribe to 90 crore shares at the issue price in the IPO.
RIL will be making a payment towards these 90 crore equity shares one day prior to the opening of the issue at Rs 62 per share amounting to Rs 5,580 crore.
The RIL subscription to these 90 crore shares at Rs 62 per share sets a benchmark for the stock and raises questions about whether this in some way undermines the bookbuilding process for the IPO. Sources in the company said the RIL subscription formed one part of the various terms of the issue and that it did not violate any regulations.
Retail investors will have the option of paying only Rs 16 per share on application and the rest on allotment, a press statement issued by RPL said today. Retail investors can apply for a minimum of 100 shares and a maximum of 1,600 shares.
Senior RPL officials are set to embark on roadshows from January 10 which will cover cities like Mumbai, Delhi, Calcutta, Chennai and Hyderabad. Sources added that the itinerary also includes international locations that include Singapore and Hong Kong. In India, the roadshows will focus on the broking and analyst community.
RPL had initially proposed to offer 180 crore shares in the draft red herring prospectus. However, as it placed close to 45 crore shares with a group of financial institutions, the issue size has come down to 135 crore shares. Of these shares, RIL will subscribe to 90 crore shares and 35 crore will be offered to the public.
The total number of outstanding shares will stand at 180 crore as the pre-IPO private placement has a lock-in period of one year from the date of allotment of equity shares in the proposed IPO. Some of the investors that bought RPL shares in the issue included Citigroup, Blackstone, UBS, Deutsche Bank, State Bank of India, ICICI Bank and Life Insurance Corporation.
RPL will raise close to Rs 8,370 crore at the upper end of the band from the offering which closes on April 20.
The issue is being made to part-finance the Rs 27,000 crore export-oriented refinery being set up in a Special Economic Zone (SEZ) at Jamnagar, Gujarat. The refinery will have a capacity to process 5,80,000 barrels per stream days making it the sixth largest refinery in the world. As a part of this project, RPL is also setting up a 9,00,000 tonne per annum polypropylene plant. The project is likely to go on stream by December 2008.