| But that figure isn't large by Asian standards. $9.8 billion was raised by issues from Southeast Asia alone last year. This year, that number is expected to double, thanks to governments across the region rushing to privatise. |
| Nor is the ONGC issue exceptionally big by Asian standards. Among forthcoming issues, Thai electricity generator EGAT is expected to mop up $1.8 billion or Rs 8100 crore, while a couple of Malaysian companies ( a land developer and a mobile operator) are expected to come up with issues worth $2.6 billion (Rs 11,750 crore) and $2.8 billion respectively. |
| The giant in IPOs is of course China, with total offerings estimated at $15 billion (Rs 67,800 crore) this year. Currently around $6 billion worth of IPOs are on the anvil, with a $5 billion issue from China Construction Bank alone, while another billion dollars is being raised by the sale of China Power International. |
| China's Semiconductor Manufacturing International Company's current $1.5 billion IPO is likely to be priced very richly. Recall that in the last few months of 2003, Chinese IPOs mopped up well over $3 billion (Rs 13,500 crore). |
| Putting Chinese issues in perspective, their government has sold $62 billion (Rs 2,80,000 crore)worth of state assets since 1992. Contrast our dismal performance. |
| How have these large IPOs impacted the Chinese and Southeast Asian markets? Well, the Chinese MSCI index is up 5 per cent this year, the Malaysian index up 10 per cent, the Indonesian up 16 per cent. |
| Hong Kong , where many of the Chinese companies are being listed, is up 13 per cent this year in terms of the MSCI index. Apart from India, only the Thai MSCI index is in negative territory this year, but that could be on account of bird flu. |
| The point is that it's not just the Indian market that is seeing a rush of IPOs "" markets across Asia have been awash with IPOs for many months now, and they're none the worse for them. The trouble with the Indian government's divestment programme is that it wasn't well-planned "" which means it wasn't spread out over a period and it doesn't involve overseas listing. |
| With domestic appetite limited, it's no wonder that the market is jittery. Contrast the phenomenal $80 billion demand for China Life's $3 billion Hong Kong listing, with demand worth $47.5 billion from global institutional investors. |
| Considering the splash that the India story is making overseas, and the fine pricing that the Indian Hotels convertible attracted, the government should have taken the time to go in for international offerings. |
| Reliance Energy |
| Reliance Energy Ltd ( REL), the new avatar of BSES, has announced that, along with its affiliates, it will invest Rs 20,000 crore over the next five years in enhancing its power generation activities. |
| The amount is by no means massive for the Reliance group, considering that Reliance Industries' net worth at the end of FY03 was Rs 30,374 crore. |
| REL's preferential issue would have participation from sophisticated investors like LIC and GIC worth Rs 600 crore and analysts point out that it sends a strong signal to the investment community of the viability of the projects planned. |
| The group's strategy in power generation is tailored to fit in with their gas finds, on the one hand, and their new distribution and power trading initiatives on the other. |
| For instance, while Reliance Energy-controlled Reliance Egen (REPL) will be implementing the gas-fired 3500 MW power project in Western UP, the move would give sister company RIL a long term customer for its gas finds in the Krishna Godavari basin. |
| Also gas is a clean fuel, while coal needs to be washed before use, and the fly ash that is generated as waste needs to be disposed. Consequently, with better technology, Reliance should be able to generate power at a cost lower than its competitors. |
| The company management is hoping to leverage this advantage, by transporting the output to the principal consuming markets of Mumbai and Delhi. Demand for power in these two metros is growing at 7-8 per cent. |
| The Reliance management has said that the investments planned should catapult the company's net profit into the top ten of India Inc. That would probably mean a growth of at least ten times in its net profits in the next few years. |
| That may not be too difficult, given that the company plans to increase its gross block by more than 7 times in the next five years. What's important is that in the changed power scenario, BSES' somewhat tame past is no guide to the future, not only because of the changes in the country's power sector, but also because of its position as a crucial building block within the Reliance group's overall operations. |
| With contributions fromAmriteshwar Mathur |
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