Sucheta Dalal :Reliance Powers Off on Listing Day
Sucheta Dalal

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Reliance Powers Off on Listing Day  

February 12, 2008

Historic IPO success blows a fuse


By Sucheta Dalal


Power Off

At regular intervals today, a bright bulb lit the television screen, flickered and then went off. This humiliating visual, which was replayed at regular intervals on CNBC-TV 18 played a big role in triggering panic and despondency among investors after Reliance Power Limited made its debut at a stunning discount of Rs 20 to the issue price of Rs 450. This is the same company that was making history with its marketing hype and the overwhelming response to its public offer.

Things only got worse as the day progressed as investors dumped millions of freshly allotted shares in an attempt to get out at the least loss. Many of these were grey market operators, who, just a week ago were projecting a 100% opening day premium and had confidently made cash payments to investors to lure them into the grey market. All that was history on Monday as grey market operators threw in the towel and were not honouring commitments anymore. Reports from Kolkata and Jaipur also talked of hefty losses running into thousands of crore rupees and a liquidity crunch among investors, who had borrowed to apply for Reliance


Celebrations were on:

While its investors were in mourning, the promoters of Reliance Power Limited celebrated its “successful listing” with a loud party at Seawind – the Ambani residence at Cuffe Parade in Mumbai. The lead managers were all there, so was its marketing and advertising executives. Anil and Tina Ambani played hosts and the food was catered by Blue Sea. The celebration incensed a few market people who felt that the company ought to have cancelled the celebrations. A wag said, ‘Why should they? They have succeeded in collecting the money, too bad for the suckers who parted with it’.


SMS Frenzy

The best indicator of market sentiment is the flurry of text messages (SMS) that are created, generated over any issue. Today, it was Reliance Power that triggered all the creativity. Unfortunately, most of the messages were too libellous to be posted on this website, but clearly, there were a lot of angry investors in the market today. Many of them felt they had been taken for a ride by all the hype. Some wanted action against the lead managers for helping promote an overpriced issue.


REL Investor’s Forum demands SEBI Chief’s resignation

The forum was all righteous indignation – after all they had fought hard to try and stall the Reliance Power IPO and were silenced by the stunning public response.

Today however, they sprung back to action and issued the Press Release posted below.


REL Investor’s Forum Says Its Pre-IPO Fears Vindicated

Demand SEBI Chief’s Resignation for ignoring their warnings.

New Delhi/ Mumbai, February 11, 2008:  REL Investors Forum, which had raised several issues before the Reliance Power IPO and had also written to the Securities and Exchange Board of India (SEBI) on the irregularities in the IPO and its adverse effects on Reliance Energy Limited (REL) investors interest have demanded immediate resignation of SEBI chairman for (failing to) protecting the investors interests by allowing of the Reliance Power issue at such a high premium.


The SEBI totally ignored the plea of various investor forums and the order of the Bombay high court, which had asked SEBI to expeditiously look into the serious irregularities in the Reliance Power IPO, cited by investors.

"We had asked SEBI to go into depth into the irregularities in the IPO to ally the fears of investors who are being duped every now and then by unscrupulous promoters’. SEBI totally ignored the plea and sided with the promoters instead of the investors. Had SEBI acted on time the investors would not have suffered and seen the present day", said Mr Parkash Krishnan of REL investors forum.


"Shareholders approval were not obtained for transfer of projects from REL to Reliance Power. These are serious corporate Governance issues which should be resolved before clearing the RP, IPO" Mr Upadhyaya said.

The investors have demanded probe into the role of Media including news agencies (PTI) for creating the uncalled for hype and filing false speculative stories day-in-and day-out including today's front page interviews of Anil Ambani, the main culprit for bringing down the markets and inflicting losses to lakhs of innocent investors for personal ambition of becoming world's richest person.

The truth always prevails Satyamave jayatey


(These are the views of the association and have only been edited and spell-checked)


-- Sucheta Dalal