Reliance Petro fixes IPO Price

Reliance Petroleum (RPL) has fixed the price band for its forthcoming initial public offer (IPO) at Rs 57-62 per share, valuing the Mukesh Ambani company at Rs 27,900 crore at the upper end of the price band. The issue, closely watched by retail and institutional investors alike, is scheduled to open for subscription on April 13 and close on April 20. RPL, a unit of Reliance Industries (RIL), one of India's largest private companies, plans to use the funds from the issue to part-finance its proposed Rs 27,000-crore export-oriented refinery in the special economic zone at Jamnagar in Gujarat. In its draft red herring prospectus filed recently, RPL had initially proposed to offer 180 crore shares. However, in a pre-IPO private placement last week, RPL offered 45 crore equity shares to foreign institutional investors, financial institutions and banks at Rs 60 a share, raising Rs 2,700 crore. The shares offered in the private placement are locked in for one year from the date of allotment of the shares in the IPO. Also, in the IPO of 135 crore shares, parent RIL is scheduled to subscribe to 90 crore shares at the issue price. According to a statement issued by RPL on Wednesday, RIL is scheduled to make a payment of Rs 62 per share on the 90 crore shares, amounting to Rs 5,580 crore. RIL shares rose 0.2% to Rs 839.55 on Wednesday, giving the company a market capitalisation of Rs 64,346 crore. The net size of the IPO to the public is 45 crore shares, with retail investors having the option of paying only Rs 16 per share on application. Retail investors can apply for a minimum 100 shares and a maximum of 1,600 shares. At 100 shares, an individual investor will have to fork out Rs 1,600 on application and Rs 5,700 on allotment, assuming that he or she applies at the lower end of the band. At 1,600 shares, an investor will have to spend Rs 25,600 on application and Rs 91,200, assuming he or she gets allotment. RPL's export-oriented refinery will have a capacity to process 580,000 barrels per stream, making it the sixth-largest refinery in the world. As a part of this project, RPL is also setting up a 900,000-tonne per annum polypropylene plant. The project is expected to go on stream by December '08.