Oommen A. Ninan

MUMBAI: The Board of Reliance Power on Sunday approved a proposal for issuing bonus shares to all categories of shareholders, excluding the promoter group (comprising the Reliance Energy Limited and the Anil Dhirubhai Ambani Group), in the ratio of 3 shares for every 5 shares held.

This announcement came in a short span of time (just 10 trading days) since the company was listed on the stock exchanges on February 11, 2008, which saw a steep fall in its share price by 11 to 15 per cent compared to its initial offer price.

The offer will reduce the cost of Reliance Power shares below its Initial Public Offer (IPO) price: Rs.269 per share for retail investors, 40 per cent lower than the IPO price of Rs.430; and Rs.281 per share for other investors, 37 per cent lower than the IPO price of Rs. 450.

Voluntary contribution

In a related development, Anil D. Ambani, Chairman, Reliance ADA Group, announced a voluntary contribution of 2.6 per cent of his shareholding in Reliance Power to the Reliance Energy Limited to protect the company from any dilution of its existing 45 per cent stake in Reliance Power, as a result of the bonus proposal. Reliance Energy’s stake will be maintained at 45 per cent.

Public shareholding

In the revised shareholding pattern, Mr. Ambani’s holding in Reliance Power gets reduced from 45 to 40 per cent, Reliance Energy’s holding maintained at the same level of 45 per cent and the shareholding of the public has increased from 10 to 15 per cent.

The reduction of Mr. Ambani’s shareholding represents a contribution of nearly Rs. 5,000 crore by him in favour of nearly 6 million investors in Reliance Energy and Reliance Power. Based on the proposal for issuance of bonus shares, the paid-up capital of the company will stand increased to 239.7 crore equity shares of Rs.10 each.

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