Reliance Infratel Ipo To Take 'power' Cue

[@ksh@T 20]

MUMBAI: Anil Ambani’s Reliance Infratel proposes to offer price discount and staggered payment facility to retail investors bidding for its book built issue that is expected to raise Rs 5,000-6,000 crore.

Mr Ambani’s Reliance Power also offered same sops to the retail investors who had applied for its recently-concluded Rs 11,560 crore IPO, the country’s largest primary market issue so far.

It had offered a flat discount of Rs 20 a share to them, nearly 4% of the issue price of Rs 450 and a part-payment facility wherein an investor could apply for the issue with a 25% payment.

Although the exact amount of the discount for the RITL issue will be determined later, bankers close the IPO said they will be in line with Reliance Power. Reliance Power was the first company to offer discount to retail investors after the market regulator, Sebi permitted such freebies with a cap of 10% of the issue price.

RITL proposed the idea of offering these sops in the draft red herring prospectus (DRHP) of the issue which was submitted to Sebi on Monday. ET was the first to report on the forthcoming issue and the possibility of filing the DRHP with Sebi this week in its Monday edition.

According to DRHP, the entire book built issue will hawk 8.91 crore shares, representing 10.05% of the post-issue equity capital of the company, of face value of Rs 5 each. RCom, the Ambani group’s telecom company, now holds 95% stake in RITL. Post issue, the equity capital of the company will go up to Rs 443.6 crore from Rs 399 crore.

Going by the expected issue size of Rs 5,000-6,000 crore, the issue is likely to be priced at Rs 560-670 a share. The proceeds of the issue will be spent to finance the company’s’ expansion plan which entails setting of 16,000 towers for over Rs 4,600 crore next year. It has tower sites of 23,434 in the country’s each 22 circles on December 31, 2007.

The draft prospectus says RITL posted a net profit of Rs 154 crore in the nine months ended December, 2007 on total income of Rs 902 crore. Its operating profit before tax at Rs 247 crore. A Macquarie Equities research report valued RITL at Rs 54,400-71,000 crore while RITL’s valuation stands at $13.1 billion to $14.9 billion (Rs 51,247 crore to Rs 58,288 crore), according to a Deutsche Bank report. Both the valuations were based on the discounted cash flow (DCF) method.