RPL IPO emerges as world's 13th biggest

Mukesh Ambani group company Reliance Petroleum (RPL), may not have found much favour with investors during its nearly eight-months stay on the bourses, but the company has found mention in a list of the world's 15 biggest IPOs in 2006.

Reliance Petroleum made its debut on the Indian stock market in May of this year following a much-hyped initial public offer (IPO) that is oversubscribed by more than 50 times and generated total proceeds of about Rs 8,200 crore ($1.83 billion) for the company.

RPL's public issue has emerged as the world's 13th biggest IPO in 2006, and is the only Indian entry in the list of top-20 IPOs, according to the data compiled by global research major Ernst & Young (E&Y) and financial information providers Dealogic and Thomson Financial.

While the stock debuted at a sharp premium of 70 per cent over the IPO price of Rs 60 a share on May 11, it has pared nearly the entire premium and is trading near its offer price over the past few months. After listing at Rs 102 per share, RPL shares have remained below Rs 70 a share since the end of May and closed at Rs 63.05 a share on Friday last week.

Still, the hugely succesfull IPO has earned the company a place with China's Industrial & Commercial Bank of China (ICBC), which has emerged as the biggest IPO with total proceeds of about $22 billion in Hong Kong.

There are as many as seven Asian companies that figure in the top 20 list, while six IPOs is from the emerging markets, the data compiled by E&Y, Dealogic and Thomson Financial shows. The IPO from a Chinese bank -- Bank of China -- raised $1.19 billion in Hong Kong and earned the second slot in the biggest ever IPO list.

Along with China's Daqin Railway Co (ranked 12th with proceeds of $1.88 billion), there are three Chinese companies in the top-20 list, while there are four companies from the UK and two from the US.

However, ICBC's, IPO size is nearly 12 times of the total proceeds raised by the only Indian entity in the list.The market analysts believe although there is not much near-term upside potential in the share price, RPL can give good returns in the long term as the company's new refinery in Jamnagar will commence production only in December 2008.

The new 5,80,000 barrels per day refinery, which is being built at an estimated cost of Rs 27,000 crore ( $ 6 billion), is expected to earn better margin than its parent company Reliance Industries' existing refinery in Jamnagar.RIL, owns a 75 per cent stake in RPL, while US based energy giant Chevron Corp has acquired a 5 per cent stake as a co-promoter in the company with an option to raise this stake by another 24 per cent.

Earlier in October, the company signed a deal with a consortium of 14 international banks for a loan of $ 2 billion to finance its Jamnagar refinery. This is part of the $ 3.5 billion debt that the company is planning to pick up for the refinery.

The loan of $ 2 billion is 33 per cent higher than the originally planned $1.5 billion loan, while the rest of the loan is expected to be mobilised in 2007.