Professional Ideas

New Delhi, An association of investors in Anil Ambani-led

Reliance Energy today alleged that the planned IPO of Group Company

Reliance Power will erode the value for REL shareholders, but ADAG termed

it as a “vicious campaign” by vested industrial interests.



“A close study of draft prospectus reveals that the power generation

business opportunities secured in the name of REL and secured with the

strength of REL have been transformed to RPL by means of some internal

MoUs and understandings,” REL Investors Forum said in a faxed press

release.



“The shareholders of REL have been deprived of the entire power generation

business prospects to be accrued to them. By means of such a transfer of

business and creation of another shell company to issue public shares, now

the power generation profits will accrue to the new company in which Anil

Ambani holds 50 per cent.” Investors in REL are feeling cheated with ADA

group company RPL’s proposed public issue, it noted.



When contacted, REL Investors Forum Secretary ‘Veekay’, whose name was

mentioned on the release along with two other persons — Prakash Krishnan

and Anil Upadhyaya – said that the forum members include 60-70

shareholders of REL.



“We are looking at taking legal recourse to safeguard the interest of REL

shareholders,” Veekay said, adding the forum was also writing to other

shareholders to join the campaign.



However, a Reliance ADA Group spokesperson said in a statement, “Vicious

campaign of disinformation (is) underway by vicious industrial interests

to stall Reliance Power IPO.”

The spokesperson said attempts were underway to engineer motivated

litigation and the “campaign was motivated by frustration at continuing

success and rising valuation of ADA group”. Reliance Power’s IPO was

awaiting SEBI approval in normal course, the official added.



When asked to comment on ADAG’s view that the campaign was being promoted

by some vested industrial interests, the forum secretary denied any links

to any rival of the group.



“We have not been approached by any group… It’s just an initiative of

REL shareholders,” he said, when asked whether they have been contacted by

rivals.



The Reliance ADA group spokesperson said that forged letters by Members of

Parliament based on false and baseless allegations were also also part of

the vicious campaign.



The forum said in its press release that the new company being created had

no resources for executing projects and was dependent on REL for

technical, manpower and commissioning support as well as for guarantees

for raising finances.



“The Anil Ambani group is planning to charge a huge premium from the

public for the Reliance Power shares, but ADAG’s investment companies and

REL have been alloted 210 crore shares at face value of Rs 2 per share and

only 16 crore shares will be alloted to the promoters at the same price as

the public,” it added.



Reliance Power proposes to come out with an IPO of 160 crore shares to

part fund 12 power projects envisaging an investment of nearly Rs 100,000

crore. The IPO is being pegged as the biggest ever in India with a total

estimated proceed of about Rs 12,000 crore.