Reliance Power Limited IPO Payment Options

Reliance Power Limited IPO, the largest IPO in Indian stock market history is opening on January 15, 2008. Issue will close for subscription on January 18, 2008. Price band of the 100% Book Built Offer has been fixed to Rs. 405/- to Rs. 450/- Per Equity Share. The payment methods available to Reliance Power Limited IPO investors are as below:

1. Payment Method - 1 (Partial payment option)

Even though the issue price of the Reliance Power Limited IPO is in between of Rs 405 to Rs 450 per equity share, investor are all allowed to pay a partial amount Rs 115 Per Equity share at the time of bidding.

Below are few facts and highlights of partial payment option:

1. Only Retail Individual Bidders and Non-Institutional Bidders are eligible for this method QIBs cannot submit a bid under this Payment Method.
2. While bidding, the Bidder shall make a payment of Rs. 115 per Equity Share, irrespective of the Bid Price. Investors should note that the total Bid Amount will be used to determine whether a Bid is in the Retail Individual category, Non-Institutional category or not, and not the amount payable on submission of Bid-Cum-Application Form.
3. At the time of allotment:
   • If the amount paid by the Bidder is equal to or higher than the total amount payable (being the Issue Price multiplied by the number of shares allotted) by the Bidder on the Equity Shares allotted to the Bidder, company reserve the right to adjust the excess amount towards the Balance Amount Payable and issue fully paid Equity Shares only. The excess amount, if any, after adjusting the Balance Amount Payable shall be refunded to the Bidder (i.e., Refund = Total amount paid on bidding minus the total amount payable on the shares allotted).
   • If the amount paid by the Bidder is less than the total amount payable by the Bidder (being the Issue Price multiplied by the number of shares allotted) on the Equity Shares allotted to the Bidder, company reserve the right to adjust the excess of the amount received from the Bidder over the Amount Payable on Submission of Bid-cum-Application Form towards the Balance Amount Payable and issue a Call Notice for the balance.
   • The notice of the Balance Amount Payable will be published in two widely circulated newspapers (one each in English and Hindi) and a regional newspaper along with the statutory advertisement for the Basis for Allotment.
4. Equity Shares in respect of which the Balance Amount Payable remains unpaid may be forfeited, at any time after the Due Date for Balance Amount Payable.

2. Payment Method - 2 (Full payment option)

This is the standard method of bid payment where investor pay full amount at the time of submitting the bid.

Below are few facts and highlights of this payment option:

1. Bidders under any category can choose this method.
2. While bidding, the Bidder shall have to make the full payment (Bid Amount multiplied by number of Equity Shares bid) for the equity shares bid. Bidders in QIB category will be required to make payment of 10% of the Bid Amount multiplied by the number of Equity Shares bid, with the balance being payable on allocation but before allotment.

Important note:

1. Every Retail Individual Bidder should indicate the choice of Payment Method (i.e. Payment Method-1 or Payment Method-2 as applicable) in the Bid cum-Application Form, subject to the Bidder’s eligibility for the Payment Method. Once the choice is indicated, the Bidder should not revise the selection. No Bidder can select both the Methods in a Bid-cum-Application Form. In case no Payment Method is selected and the full Bid Amount is paid, then the default Payment Method would be Payment Method-2.
2. If investors who opt for Payment Method-1 (partial payment option) do not pay the Balance Amount Payable, the amount raised through the Issue will be lower than the proposed Issue size. In the event of such shortfall, the extent of the shortfall will be made by way of such means available to the Company and at the discretion of the management, including by way of incremental debt or cash available with the company.
3. Shares issued to investors who opt for Payment Method-1 will not be traded till the corporate action for credit of fully paid shares is completed. The Equity Shares of which the Balance Amount Payable has not been paid within the prescribed time limit are liable for forfeiture. The shortfall due to forfeiture may be made up by re-issue of the forfeited Equity Shares.
4. All non resident bidders availing the option of payment method-1 are required to submit a copy of an approval from the RBI allowing them to subscribe to the partly-paid up equity shares.