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Indian power company issues bonus shares

Shareholders in a family-owned Indian power company have been given bonus shares to counteract the drop in value of their shares following an IPO. Reliance Power, which was founded by Anil Ambani (pictured) after a feud with his brother resulted in their father's company being split in two, raised a record-breaking $190 billion by the time the IPO closed on 18 January.

However, despite attracting the largest number of shareholders of any firm in the world – comprising of 500 overseas and domestic institutional investors, and over four million retail investors – shares in Reliance Power fell sharply on their stockmarket debut.

"I have been personally concerned by the notional losses arising to millions of long-term investors in Reliance Power, as a result of a dramatic adverse change in sentiment in global and domestic capital markets, subsequent to the pricing of our IPO," said chairman Ambani.

The bonus shares are in the ratio of three shares given for every five shares held. The firm has issued these extra shares because Ambani has reduced his own shareholding to 40% –  down from 45% – a contribution of nearly $1.2 billion. Public shareholders now hold 15% of the firm, up from 10%.
"We have taken these one-time and unprecedented measures in demonstration of our philosophy of endeavoring to protect and enhance value for all our long-term shareholders," said Ambani.

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