Mumbai, December 28
Anil Ambani group today got the regulatory go-ahead from SEBI for the public issue of Reliance Power Ltd — the group's first IPO and estimated to raise about $3 billion, the highest ever proceeds in India.

SEBI has issued its observations on the draft prospectus of Reliance Power while clearing the way for IPO, sources close to the development said.

The public offer by the ADAG firm Reliance Energy's subsidiary is expected to be launched early next year and could raise over $3 billion , eclipsing the public issue of realty giant DLF, which had raised more than $2 billion and is the biggest ever IPO so far.

The go-ahead comes a day after SEBI disposed off a complaint against the IPO, while saying that "the entire promoter quota, that is, 20 per cent of the capital in Reliance Power shall be locked in for a period of five years from the date of allotment in the proposed IPO."

Reliance Power had filed its Draft Red Herring Prospectus on October 3 this year. In its last primary market update on processing status of draft offer documents, SEBI said on December 20 that it was awaiting clarifications from the lead managers of the IPO before issuing its observations.

Yesterday, a two-member bench comprising members T C Nair and V K Chopra, accordingly disposed off the case it was hearing following an order by Mumbai High Court on a PIL.

While SEBI wanted full disclosure by promoters and the lead managers as per the various statutes and guidelines to protect the interest of investors, it did not take up the issue of 'short charging of shareholders' due to transfer of projects from ADAG group company Reliance Energy Ltd to Reliance Power.

"We are leaving this issue open for the complainant to take up with appropriate forum," SEBI ruled, adding that it did not have jurisdiction to deal with allegations that could be a subject matter of oppression and mismanagement of the company by its promoters.

SEBI, however, noted that ministry of corporate affairs had informed that "prima facie there does not appear to be evidence at this stage to establish a violation" of certain sections of the Companies Act, 1956, relating to transfer of projects from REL to Reliance Power.

SEBI, however, said REL shareholders can approach corporate affairs ministry if they "perceive any mismanagement or oppression by the management of Reliance Energy".

SEBI had started hearing the case early this month and gave a ruling after it heard both sides since December 4.

Following the reply filed by Reliance Power on December 7, the complainant sought time till December 26 to file additional rejoinder but did not do so. — PTI 

Islamabad, December 28
The assassination of former Pakistan Prime Minister Benazir Bhutto could adversely impact foreign direct investment (FDI) and capital inflows into the country, global rating agency Standard and Poors (S&P) said today.

The killing would also make it difficult for Pakistan to refinance external and domestic debts since the risk aversion of lenders would be on the rise, the agency said in a report.

FDI and portfolio flows would likely decline, negatively affecting Pakistan's external liquidity position, given its large current account deficit of about 4.8 per cent of GDP, it said.

According to S&P, fiscal slippages may also arise pushing deficits beyond the government's targeted 4 per cent of GDP and jeopardise the favourable debt trajectory.

Terming that Bhutto's death is a significant blow to Pakistan's transition to democracy, the agency said a prolonged political stalemate or social disorder would make the ratings vulnerable.

The assassination in itself will not result in a rating action, it said. However, a further weakening of Pakistan's institutions, in conjunction with rising levels of violence and disorder and the postponement of January 8 elections would lead to a rating downgrade, S&P said.

Currently, the agency has a negative outlook on Pakistan's credit worthiness after it was downgraded from stable following the imposition of emergency last month.

The report noted that the prevailing negative outlook on Pakistan encapsulates to a large extent risks to the political process, including attempts on the life of political leaders after a number of such incidents in past.

Meanwhile, Moody's Investors Service is also having a negative outlook on the country's credit rating. — PTI 

Tokyo, December 28
Suzuki Motor Corp, facing growing threats to its 50 per cent share of India's car market, may cut the price of its cheapest car in the country to counter Tata Motor's proposed Rs 1 lakh car.

"We will have to do at least that," Shinzo Nakanishi, managing director of Suzuki's local unit, Maruti Suzuki India Ltd, said in an interview at the company's head office in Hamamatsu, Japan, yesterday. Suzuki's cheapest car in India, the Maruti 800, now costs Rs 192,124 in New Delhi showrooms, according to Maruti's website.

Cutting prices may help Suzuki maintain dominance in its biggest market as the company faces greater competition from Tata and foreign rivals, including General Motors Corp and Hyundai Motor Co.

Other automakers, including Renault SA have also proposed selling ultra-cheap cars in India, the world's second fastest-growing major auto market. — Bloomberg

Mumbai, December 28
Real estate giant DLF today pipped Bharti Airtel to become the country's second most valued private sector company after Reliance Industries, following a surge of over 5 per cent in its share price.

In an overall flat market, shares of DLF rose by 5.31 per cent at the BSE to close at Rs 1,063.70 — more than double its IPO price in less than six months of listing.

The company's market capitalisation surged to Rs 1,81,343 crore at the end of today's trading, marking a gain of about Rs 9,150 crore over the previous day. This is second highest among private sector companies after country's most valued firm RIL, which has a market cap of over Rs 4,21,000 crore.

This is estimated to have swelled DLF chairman K P Singh's wealth to more than $40 billion (about 1,60,000 crore). Last month, Singh was named as world's richest realtor with a wealth of $35 billion by Forbes magazine. Forbes had calculated Singh's wealth on the basis of DLF share price on November 2, since when the scrip has gone up by 14.3 per cent.

Today's rally, which followed reports that DLF was mulling over listing its various subsidiaries, made it the country's fourth most valued firm across both private and public sector companies.

RIL is followed by two public sector companies ONGC and NTPC in the market capitalisation league at over Rs 2,62,000 and Rs 1,99,000 crore, respectively.

DLF was followed by telecom major Bharti Airtel as the country's fifth most valued company with a market value of Rs 1,78,530 crore.

Earlier in the day, shares of DLF touched a life-time high of Rs 1,072. — PTI 

New Delhi, December 28
Upset over a campaign by "vested interests" that there has been a restriction on issuing new licences, the Department of Telecom (DoT) today indicated that LoIs to new aspirants would be issued as per the existing policy that does not put a cap on the number of players in a circle.

"It is learnt that vested interests are spreading misconceptions in some quarters that the NTP 1999 puts restrictions on new licences and should be granted only if spectrum is available.

"However, Unified Access Service License policy after the Cabinet decision of October 31, 2003 and TRAI recommendations of no cap, it is very clear that such misconceptions are wrong," a senior official in the Department of Telecom (DoT) said.

Asked whether the existing GSM operators were putting pressure on the government not to issue any new licences, the officials declined to comment.

Clarifying reports that new licensees would be allowed to sell UAS licences soon after allotment by the government, DoT said the mere issuance of UAS licence does not enable an operator to offer mobile services or usage of spectrum.

To start mobile services, an operator has to procure Wireless Operating Licence separately besides UAS licence. The two licences are different and hence the possibility of reselling the UAS licence does not arise, the official said.

DoT had received over 575 applications from 46 companies and these are being scrutnised for consideration.

The department had earlier said that at least 4-5 new players can be accommodated to start pan-India mobile services.

This would not only help increase penetration of services but would also bring down tariffs by about 50 per cent. — PTI

New Delhi, December 28
Goldman Sachs, the world's biggest securities firm, and Singapore government's investment arm Temasek are among a clutch of investors that have picked up around 8-10 per cent stake in the tower subsidiary of Bharti Airtel Ltd for $1 billion.

"The enterprise valuation has been agreed to be in the range of $10-12.5 billion and the final valuation will be determined on the basis of Bharti Infratel's actual operating performance in 2008-09," a Bharti statement said.

Bharti Infratel is a wholly-owned subsidiary of Bharti Airtel. International investors also include The Investment Corporation of Dubai, Macquarie, AIF Capital Citigroup and India Equity Partners.

Temasek is the largest investor in the transaction.

Bharti Infratel owns 42 per cent stake in Indus Towers, the joint venture between Bharti Airtel, Idea Cellular and Vodafone Essar for 16 circles with 70,000 sites. Bharti Infratel has 20,000 sites in the remaining seven circles.

Bharti Infratel and Indus Towers will provide passive infrastructure services to all wireless telecom operators in India, it said. Sharing passive infrastructure saves capital and operating expenditure and improves capital efficiency for all wireless operators, enabling quicker roll out of services especially in rural areas, the statement added. — PTI 

Mumbai, December 28
To attract retail investors into the ever growing derivatives market, the Bombay Stock Exchange will launch 'Sensex mini derivatives contracts' from January 1, 2008.

The small size of the contract would woo retail investors as there would be comparatively lower capital outlay, trading costs, more precise hedging and flexible trading, a BSE release said.

The mini derivatives contracts would be in a market lot of five, it added.

It is a step to encourage and enable small investors to mitigate risk and gain easy access to India's popular index, Sensex, through futures and options, the release said.

The security symbol for Sensex mini contracts would be MSX and would be available for one, two and three months along with weekly options.

Market watchdog SEBI has approved introduction of seven new derivative products for the domestic market. "The introduction of these products is a step intended to progressively encourage markets to move onshore," SEBI had said.

The Securities and Exchange Board of India had allowed trading in mini contracts on index (BSE 30-share Sensex and NSE 50-share Nifty) with a minimum contract size of Rs 1 lakh.— PTI 

Mumbai, December 28
Public sector Bank of India yesterday said it would raise Rs 1,350-1,400 crore through Qualified Institutional Placement (QIP) of shares for credit expansion, Basel II compliance and explore new business opportunities.

"The funds will be sufficient as a buffer for future credit expansion or a lucrative joint venture opportunities with other banks or entities," BoI chairman and managing director T S Narayanasami told reporters here.

The bank will issue 3.77 crore equity shares only to public sector enterprises and mutual funds subject to SEBI guidelines.

The issue will dilute the government holding in the bank by five per cent from 69.47 per cent to 64.47 per cent.

"We have received the approval of the ministry of finance and the bank's board to raise capital through the QIP...we hope to close the issue by the end of next month," Narayanasami said.

The board also approved to convene an extraordinary general meeting of shareholders on January 23 to consider the matter and based on the date, the floor price of the issue has been fixed at Rs 359 per share.

However, there can be a premium on the price subject to the stock price at the time of the issue.

"Based on the floor price, we could raise Rs 1350-1400 crore through the QIP," he said.

Post-issue the capital adequacy ratio of the bank will be above 13 per cent from 12.57 per cent as on end September.— PTI