Rel Power plans bonus issue to offset shareholders’ losses

Reliance Power Ltd (RPL) plans to issue bonus shares to all equity holders other than the founders, hoping to cheer retail investors after the firm’s shares tumbled following a record $3 billion (Rs11,910 crore) initial public offering (IPO). RPL’s board is scheduled to meet on 24 February to consider issuing bonus shares and/or other measures, which the company said would effectively reduce the cost of the company’s shares.
“This will include a proposal for issuing free bonus shares to all categories of shareholders excluding the promoter group, thereby protecting investors from even short-term losses on their shareholdings,” RPL said.
Reliance’s supporters say the Ambani family has a strong track record of executing projects on schedule and delivering strong returns to investors, attracting millions of investors to bid for its shares offered in India’s biggest IPO.
The company said its shares were hit by weak market sentiment and blamed rivals, who were not identified, for hammering shares of companies in the Anil Dhirubhai Ambani Group. The company also reminded investors that there were risks attached to equity investments.
“Equity shares, by their very nature, are risk-bearing instruments and there is no obligation on behalf of any issuer to insure investors against possible losses,” the company said.
However, the company’s board would consider a bonus issue and other steps as the group had a “fundamental and overriding philosophy of creating value for genuine long- term investors.”
See what I wrote on Reliance Power on 12.02.2008
Yes. I trust Anil more than Mukesh and Market .

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