Reliance Power kicks off record $3 bln IPO

Mumbai: Reliance Power launches its $3 billion initial public offering, set to be India's biggest, on Tuesday, kicking off a busy period for capital raising in the booming economy. Reliance Power plans to build power plants across India using funds raised by selling 10 per cent equity in the firm, which is 50 per cent owned by utility Reliance Energy Ltd.

Analysts say the issue is likely to get an enthusiastic response as the Indian stock market, revved by a four-year record-breaking bull run and strong flows of foreign funds, has attracted hordes of retail and institutional investors.

Indian IPO volumes soared to a record in 2007 when new listings raised $8.3 billion from 91 issues, including real estate firm DLF's $2.3 billion issue, which is so far India's biggest IPO.

Billionaire Anil Ambani's Reliance Power is poised to overtake DLF, helped by investors' faith in the family name as a result of the group of companies set up by his father, legendary business tycoon Dhirubhai Ambani.

The group was split in 2005 between Anil Ambani, who has interests in telecoms, financials, media and power sectors, and his brother Mukesh, who controls India's top listed firm, oil and petrochemicals giant Reliance Industries.

"The IPO is going to be very well received in the market, looking at the group's aspirations and because investors have faith in their execution capabilities," said Nikunj Doshi, Investment Manager at Envision Capital.

Indian companies are expected to raise $15.8 billion from 35 IPOs issues this year, almost twice as much as the record in 2007, according to Thomson Financial data.

"The markets are doing very well and investors are getting good returns. There is a fair amount of investor appetite for IPOs," said Ved Prakash Chaturvedi, managing director at Tata Mutual Fund.

The benchmark index of the Bombay Stock Exchange rose 47.1 per cent in 2007, recording its strongest growth in four years. It rose nearly 73 per cent in 2003, 13 per cent in 2004, 42 per cent in 2005 and 46.7 per cent in 2006.

In comparison, South Korea's Composite Stock Price Index gained 32 per cent, China's Shanghai Composite Index soared 97 per cent and Japan's Nikkei fell 11 per cent in 2007.