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Reliance Infrastructure started its buyback of shares to the tune of Rs 1,000 crore through open market purchases today.
The shares of Anil Ambani-led firm climbed 1.14 per cent to touch an early high of Rs 685.50 on the Bombay Stock Exchange.
The company said the buyback is mainly aimed at reducing short-term volatility in the firm’s share price as well as discourage “speculative activity” in its stocks.
In a filing to the stock exchange, the company said: “it will buyback shares up to a maximum price of Rs 725 per equity share, representing a premium of over 47 per cent to the 52-week low price of Rs 493 per equity share and a premium of about 7 per cent to the last closing share price on the BSE.”
The buyback worth about Rs 1,000 crore would be funded from investments made by the company in liquid and marketable securities.
The company has done three buybacks till date for an aggregate amount of Rs 923 crore and the current offer shows that more than 100 per cent of the aggregate amount is invested in the three previous buybacks, it said.
On a consolidated basis, the book value of the company is Rs 860 per share as on December 31, 2010. The closing price of the stock as on Friday on the BSE was Rs 678 a piece, representing that the stock is trading at a discount of about 21 per cent to the consolidated book value, according to the filing.
Reliance Infrastructure would buyback shares on the BSE and the NSE, through open market purchases from time to time.
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