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Reliance Petroleum creates waves on Indian stock exchange debut
By Salil Panchal
AFP
MUMBAI
Petroleumworld.com 05 12 06
Reliance Petroleum shares jumped more than 40 percent in their stock market debut on Thursday, with investors rushing to buy a piece of the company that is operating what will be the world's largest refinery complex.
Shares in Reliance Petroleum, a unit of India's largest private company, Reliance Industries, opened up 67 percent at 101.95 rupees (2.66 dollars) compared to the Initial Public Offer (IPO) price of 60 rupees.
They then retraced some gains on profit-taking to close up 42 percent at 85.4 rupees. The benchmark 30-share Sensex index slumped 176.97 points or 1.4 percent to 12,435.41.
"After opening strong, institutional selling pressure came in as expected," said Soumeel Chakravarthy, a dealer at brokerage KJMC Capital Market Services.
"The stock should stabilise at 88-89 rupees. We however expect retail investors to stay invested over the long term," he said.
Reliance Petroleum listed on the Mumbai and National stock exchanges to raise funds for its planned six-billion dollar, 580,000-barrel-a-day refinery in India's western state of Gujarat
The refinery, also to be financed by investment from US-based ChevronTexaco and internal funds, will be sited next to an existing refinery. The combined complex will be the largest in the world when completed in 2008.
Mukesh Ambani, chairman of Reliance Industries, banged a gong three times at Mumbai's stock exchange to launch the listing.
"This is a historic moment for us as it's Reliance's first (IPO) in 14 years and marks India's presence in the energy space," he said.
The initial public share sale was oversubscribed 51 times, more than double the previous record set by state-run Oil and Natural Gas Corp in 2003.
The price for the issue of 450 million shares was fixed at 60 rupees, with Reliance Industries and Reliance Petroleum expected to hold about 75 percent of the equity in the venture.
The construction of the new refinery comes at a time of record fuel prices and rising earnings for refiners, during a shortage of refining capacity in Asia.
Reliance's earnings from refinery output rose 17 percent to 10.3 dollars per barrel in the year that ended in March from 8.8 dollars a year earlier.
Reliance plans to export much of the product from the new refinery, focusing on gasoline and diesel fuel. At the same time it plans to open filling stations across India, where car sales have doubled in the past three years to 1.2 million for the year that ended in March.
The refinery business is the first offering from the Reliance Industries group after it split into five companies in February this year following a family feud between the brothers, Anil and Mukesh.
The restructuring deal, approved by the board late last year, left elder brother Mukesh in control of Reliance Industries with its oil and gas production. Its other interests, including telecoms and electricity generation, were hived off to younger brother Anil.
AFP 11 1147 GMT 05 06
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