Reliance Power may be forced to push its initial public offering (IPO) to early next year, as the Securities and Exchange Board of India (SEBI) is still grappling with the fine print of the red herring prospectus.
Billed to become one of the biggest IPOs in recent times, the Reliance Power issue has evinced interest among investors in the power sector, even as it triggered apprehensions in some quarters on the pricing.
Sources in the group were emphatic that the Rs 8,000 crore issue will hit the primary markets, but it's the timing they are not sure of, as SEBI is going through the details with a fine-tooth comb.
"Even if we obtain all the approvals now, we'll avoid doing road shows in the fag end of December. It's a wrong time to approach foreign institutional investors, as their fund managers normally go on Christmas holidays during that time," a source said.
For the Reliance Power IPO to be a success, the response from foreign investors will be critical.
Reliance Power is owned a little over 50 per cent by Reliance Energy, with the balance by R-ADA group's investment firms.
A clue to the postponement of the issue came when Reliance Energy promoters decided to infuse about Rs 8,000 crore in the company, through a preferential issue to the promoters and major institutional shareholders.
The infusion, to be done through warrants within a span of two years, will see the balance sheet of Reliance Energy "increase substantially," a recent report by broking firm Tower Capital & Securities said.
As REL's net worth reaches Rs 20,000 crore, post the 2009 dilution, Tower Capital said the company can give Reliance Energy "appropriate cushion" to manage an order book of Rs 1,00,000 crore.
However, analysts say that the Rs 8,000 crore infusion will only facilitate its infrastructure businesses that include metro rail, road projects, townships etc.
All the power-generating businesses have been shuffled into Reliance Power.
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