$1.1-1.3 bn Reliance Petro IPO due in April

IPO proceeds to part fund new refinery at Jamnagar.

Reliance Petroleum, the wholly owned subsidiary of Mukesh Ambani-controlled Reliance Industries, will launch its initial public offer (IPO) in the second week of April.

Investment banking sources said the mega issue, which was expected to garner anything between $1.1 billion and $1.3 billion, would hit the primary market in the week beginning April 7.

They said the company had appointed six merchant bankers and the red-herring prospectus was expected to be submitted to the Securities and Exchange Board of India on Monday. Reliance Industries executives declined to comment on the issue.

The IPO proceeds will be used to part finance the company's $6-billion project at Jamnagar. The company has an equity base of over $2 billion. It has recently concluded a syndicated $1.5-billion (approximately Rs 6,750 crore) borrowing deal.

Reliance Petroleum is setting up a new refinery with an annual capacity of 27 million tonnes (580,000 barrels per day) and a 0.9-million-tonne polypropylene complex.

On a stand-alone basis, the refinery is the sixth largest in the world and together with Reliance Industries' existing 33-million-tonne refinery at Jamnagar, it will be the largest concentration of refinery assets at a single location globally.

Sources said the merchant bankers for the issue "" it would be an IPO from the Reliance group after a gap of 13 years "" were DSP Merrill Lynch, JM Morgan Stanley, Enam Securities, ICICI Securities, Citi and SBI Caps. The Reliance Industries spokesperson was not available for comments.

Reliance Industries' holding in Reliance Petroleum will go down to 80 per cent, after the issue.

The issue will be the second largest public offer by a private Indian company after ICICI Bank's Rs 8,000 crore issue late last year.