Reliance Energy Launches Share Buyback

MUMBAI - With its stock price on the wane, Reliance Energy on Wednesday said it would spend up to $500 million to repurchase shares. The Mumbai-based company is offering 1,600 rupees ($39.81) a share, a 9.6% premium to its closing price Wednesday on the Bombay Stock Exchange. The buyback is to “reduce short-term volatility in the company's share price and deter speculative activity,” the company said in a release. Reliance Energy was one of the best performing stocks on the Bombay Stock Exchange last year, quadrupling in value on the promise of increased government spending on power generation. But it has fallen 32% this year amid a general sell-off in equities across Asia. On Wednesday, Reliance Energy fell 3% to 1,459.45 rupees ($36.31). Bombay's benchmark Sensex was up 1.2% at 16,542.08. The buyback is expected to restore some stock market luster to companies of the Anil Dhirubhai Ambani Group. Last month, Reliance Power shares slumped 17% on their first day of trading, despite the tremendous anticipation for the $3 billion IPO, India’s largest ever. Another Ambani company, Reliance Communications, has filed with the stock market regulator to sell shares amounting to 10% of the tower business Reliance Infratel. The sale is expected to raise $1 billion to $1.5 billion. It is also considering listing its newly formed Reliance Globalcom unit.