Reliance Power wants to hike IPO value

Reliance Power, which is awaiting regulatory nod for its IPO, that could be the largest in the Indian history, is willing to convert the par value of its shares to Rs 10 from the current Rs 2. Last week the company wrote a letter to Sebi to this effect, sources said.

When contacted by TOI , a Reliance Power spokesperson declined to comment.

The move on the part of the Anil Dhirubhai Ambani Group (ADAG) company comes even as its application to Sebi to allow it an exemption to go ahead with the IPO with Rs 2 par value but priced below Rs 500, was pending approval.

As per current Sebi rules, all companies tapping the market whose par value of shares is Rs 5 or less, has to take the book building route and price its shares at a minimum of Rs 500. However, as per a July amendment to the IPO rules, this does not apply to government run companies from the infrastructure sector.

Market sources said that while filing its prospectus with Sebi on October 3, Reliance Power had asked the regulator for a similar exemption as enjoyed by PSU companies in the infrastructure sector. Its reasoning was since Reliance Power is also an infrastructure company, so the regulator could allow it to price its Rs 2-par-value shares at below Rs 500 per share in its IPO.

Amid controversies that was associated with the IPO, this point was also raised if the regulator would allow an exemption to the ADAG company an exemption from the IPO rules. On the part of the company, the reasoning was that a lower par value means lower priced shares in the IPO, which in turn would attract more retail participation.

In the meanwhile, the regulator mooted the idea of allowing all companies free pricing of its shares irrespective of the par value.

While the proposal was expected to be discussed at Sebi's November 15 board meeting, it was not taken up. Since Reliance Power was awaiting clearance for IPO, and the exemption to the issue of par value was still pending with Sebi, the company wrote to Sebi about its willingness to increase par value of its shares to Rs 10 from Rs 2, sources said. If this request is accepted by Sebi, the regulatory nod for Reliance Power's IPO could come soon, they said.