Reliance power bonus 3:5

The board of Reliance Power Ltd approved a 3-for-5 bonus share.The bonus issue of three shares for every five held will bring down the cost of Reliance Power shares to Rs269 for retail investors, as against a discounted offer price of Rs430, and Rs281 for institutions compared with an offer price of Rs450, said Anil Ambani, chairman, Reliance-Anil Dhirubhai Ambani Group (R-Adag), in a conference on Sunday.
The founder-promoters of the company, including Ambani and Reliance Energy Ltd, who together hold 90% of Reliance Power’s equity, will not be issued bonus shares. The promoters, however, had acquired shares in Reliance Power at Rs17 each.

Ambani, also the non-executive chairman of Reliance Power, said he was giving up 2.6% of his shareholding in Reliance Power to Reliance Energy, which owns about 45% of Reliance Power, so its ownership structure remains intact. After the bonus issue and this transfer, Ambani’s stake in Reliance Power will fall 5 percentage points to 40%, while public shareholding will rise to 15%.

Reliance Power has sought an enquiry by the Securities and Exchange Board of India (Sebi), the stock market regulator, into “hammering” of the stock price, Ambani said.

Reliance Power plans to set up 13 plants with 28,200MW of generating capacity in five years, one-third of India’s planned projects in power. However, the first of these plants will only start production in 2010 and the company is unlikely to report strong profits for five years.