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Reliance Power offers bonus shares 3 for 5 shares

The Biggie Reliance Power IPO was subscribed 72 times and had received nearly 31 lakh applications which is a new record for most applications received. But when Reliance Power shares listed on 11th February the scenario changed and the market started coming down making Reliance Power shares plunging 17.22% below the issue price of Rs.450. Making most of the investors losing millions of money with no hope to get the invested amount with a good return. It was a black Monday as many investors had taken loan from banks to invest in Reliance Power IPO and got stucked in between of the falling market situation.

But on Sunday 24th February, Anil Ambani gave up Rs 5,000 crore ($1.2 billion) of his personal wealth to enable Reliance Power shareholders to make up for their losses caused by bad listing of the stock. And announced a bonus plan for investors, where investor will get 3 shares on his each 5 owned shares.

Which will bring the cost of Reliance Power shares down to Rs 269 each for retail investors and Rs 281 each for institutional investors. This translates into a 40 per cent discount from the IPO price of Rs 430 for retail investors and 37 per cent from the IPO price of Rs 450 for institutional investors.

This might be a good news but why is Reliance Power doing so? Has anyone imagined?
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