Following the debacle, the questions propped up. How was a new company with meagre profits of Rs 16 lakhs and which had no significant assets or cash flow allowed to list the shares at a whopping premium.
February 11, 2008, was a landmark date for the Bombay Stock Exchange. On that day the shares of Reliance Power listed after the company had mopped up a record Rs 11,563 crore in its initial public offering (IPO).
For days, the buzz surrounding the issue had been growing as investors’ expectations ran high. With the government announcing plans for ultra mega power projects, the sector was hot and there was the Reliance tag which for years had guaranteed exceptional returns. The Anil Ambani group was also the flavour of the season and its chairman had staked a lot on the IPO. The new company had said it was developing 12 power projects with a combined planned installed capacity of 28,000 MW, which was then one of the largest portfolios of power generation assets under development.
The brokers were convinced and gave the thumbs up. Just before the listing the grey market premium for the shares went soaring to 80 percent setting the stage for a grand opening.