R-Power trips on debut

Largest IPO closes at 17% discount as markets tank on global meltdown.

Anil Ambani's Reliance Power Ltd (R-Power), which raised Rs 11,560 crore in India's biggest initial public offering, closed at a discount of 17 per cent on debut.

The stock had a volatile run on the market today "� opening at a 27.4 per cent premium at Rs 548 and closing at Rs 373.95 on the Bombay Stock Exchange, as a global equities meltdown forced investors away from equities across markets.

Overall, 198.2 million shares were traded today, nearly 87 per cent of the issued capital at the time of the IPO.

At the closing price, investors lost Rs 1,600 crore of their investments. Anil Ambani's market capitalisation through R-Power rose by Rs 83,794 crore. Retail investors (who applied shares for not more than Rs 1 lakh in value) were allotted shares at a discount of Rs 20 per share.

An official of the Anil Dhirubhai Ambani Group (ADAG) said the group is disappointed but added that the decline in other pivotals, including Reliance Industries, ONGC and ICICI Bank, is much larger -- between 20 and 40 per cent -- since the day the Reliance Power IPO opened, and the group is confident of superior returns over the long term.

A banker said R-Power set the tone for the markets today, which had already tumbled 7.2 per cent last week.

But R-Power had good company today. BSE's Power Index was the biggest sectoral loser today "� down 8.61 per cent. Bhel (down 5.76 per cent to Rs 1897), Reliance Energy (down 19.40 per cent to Rs 1582.30), NTPC down 6.74 per cent to Rs 189.60) and Tata Power (down 12.26 per cent to Rs 1174) were the big losers.

Anil Ambani, who hit the opening gong on BSE's erstwhile trading floor, said long-term investors would reap rich dividends if they stay with the company.

There are about 4.2 million retail investors in R-Power "� the biggest group of retail investors in a company anywhere in the globe.

Investors had sought $189 billion worth of R-Power shares in the IPO, betting it will benefit from India's $200 billion plan to expand power generation in the next seven years.

Saying the interest in the retail investor was "the best and fitting tribute" to his later father Dhirubhai Ambani, Anil Ambani added, "Reliance Power listing happens on Basanth Panjami, a very auspicious day according to the Hindu culture, and it also happens to be the birthday of my wife Teena."

Ambani, who will use the money to fund his $28 billion plan to build capacity, became the second-richest man in India after his Reliance Energy, India's second-biggest utility by market value, quadrupled in value last year.