Reliance Power yesterday raised $3bn in one minute, fully covering its initial public offering in its opening seconds as institutional investors jostled to get a share of a company that touted itself as India’s flagship power generation operator.

The company finished the first day of what is India’s largest IPO with demand for 10.6 times the number of shares available, indicating the stock will be sold at Rs450 a share, the top of the price range.

The IPO opens the way for what is expected to be blockbuster year for Indian issues.

In the first Indian offering that could challenge those of China for size, the government said this week that it might sell a 10 per cent stake in state-controlled Bharat Sanchar Nigam, India’s largest telecommunications firm by subscribers, for $10bn.

Reliance, controlled by billionaire businessman Anil Ambani, generated widespread excitement about its IPO in spite of concerns the company is overvalued and carries high “execution risk”.

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India’s Sensitive Index fell to its lowest in more than three weeks on heightened concern that the U.S. is entering a recession following Citigroup Inc.’s biggest net loss. Reliance Industries Ltd. led declines.

“Global cues are bad and that’s affecting our markets,” said Jayesh Shroff, who helps manage $7.6 billion in assets at SBI Funds Management in Mumbai. “The theory that Asian economies can decouple from the U.S. is faulty. That will not happen for a long time.”

The Bombay Stock Exchange’s Sensex declined for the third day in a row, its biggest such fall since Dec. 18. The gauge of 30 companies dropped 382.98 points, or 1.9 percent, to 19,868.11, the lowest since Dec. 24. The index had fallen as much as 3.6 percent earlier in the day. The S&P/CNX Nifty Index on the National Stock Exchange dropped 138.50 points, or 2.3 percent, to 5,935.75.

Citigroup yesterday reported a net loss of $9.83 billion in the fourth quarter as surging defaults on home loans forced it to write down the value of subprime-mortgage investments by $18 billion. The bank reduced its dividend by 41 percent and is selling $14.5 billion of preferred stock to investors, including the government of Singapore, to shore up depleted capital.

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Historically, successful development has involved exporting labour-intensive manufactures. Despite opening up to the world economy in many respects, India’s policies continue to retard the expansion of labour-intensive sectors. Here is a discussion of how India could speed its transition to a modern economy.

A key advantage claimed for the outward-oriented development strategy is that it allows poor, labour-abundant countries to specialise in labour-intensive products and, thus make efficient use of limited capital stocks. To quote Anne O. Kruger (1985), “An export-oriented strategy permits countries to use the international market to exchange their own, relatively labour-intensive commodities for capital-intensive goods.

They are thus able to take advantage of the division of labour and specialisation. This ability contrasts sharply with import-substitution policies under which labour-abundant developing countries produce the entire spectrum of manufacturing goods and experience high and rising capital/labour ratios.”

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The largest initial public offer (IPO) in the history of the Indian capital markets by Reliance Power Ltd (RPL), which opened for public subscription on Tuesday, has not just attracted record breaking demand by getting fully subscribed within a minute of its opening, but is likely to create an everlasting landmark in the IPO space.

With the opening bell at 9.55 am on Tuesday, the book-building IPO of RPL with a issue size of 22.80 crore equity shares offered for a price band of Rs 405 to Rs 450, was fully subscribed within 60 seconds.

By the day-end the demand graph on the two stock exchanges displayed that the issue had attracted bids for 239.75 crore equity shares, over-subscribed by nearly 10.52 times, worth around Rs 1.9 lakh crore.

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The Bombay Stock Exchange benchmark Sensex plummeted nearly 477 points with investors rushing to subscribe to Reliance Power’s initial public offer which opened on Tuesday.

Market players said corporate as well retail investors in their rush to invest in Reliance IPO pressed the sales button across-the-board after the mid-session, leading to liquidity drain from the secondary market.

The Reliance IPO was oversubscribed by nearly 10 times within four hours of its opening.

The 30-share BSE barometer ended the day at 20,251.09, a net fall of 476.96 points, or 2.30 per cent, from previous close.

The index touched the intra-day low of 20,203.63 points and jumped to the day’s high of 20,872.93 points.

The 50-share Nifty of the National Stock Exchange too tumbled by 132.55 points, or 2.14 per cent, to close at 6,074.25 points from last close.

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Reliance Power Ltd.’s record Indian initial public offering will be oversubscribed today, indicating the generating company may raise the maximum $3 billion sought, three bankers arranging the sale said.

The unit of Reliance Energy Ltd., India’s second-largest electricity producer by value, will get bids for at least 2 times the stock on offer when it opens at 9:55 a.m. local time, the bankers said, requesting anonymity before an announcement.

Billionaire Chairman Anil Ambani’s Reliance Energy quadrupled in value last year, the best-performing stock on India’s benchmark index, as the government plans to invest $200 billion in generation and distribution in seven years to sustain record economic growth.

“We like the long-term story in the power sector and we are interested in Reliance Power,” said Mahesh Patil, who helps manage $800 million in stocks at Birla Sun Life Asset Management Co. in Mumbai. “Although, the company’s valuations are a little on the higher side, its share sale is the first among many generation companies. That’s a healthy trend.”

Reliance Power will lead $7 billion of share sales this year in India’s power sector. Sterlite Industries (India) Ltd. plans to sell a stake worth as much as $2 billion in its energy unit and Mumbai-based JSW Energy Ltd. plans to raise as much as $1 billion through an initial share sale. Jaiprakash Power Venture Ltd. will seek $1 billion in a share sale.

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