After funding, Anil Ambani group plans growth strategies

NEW DELHI: The Anil Ambani group is poised to execute its growth startegies after it raised R17,600 crore fund and two of its operational firms Reliance Infrastructure Ltd and Reliance Power Ltd became near zero debt companies, sources with the company said.

A senior official of the group stated that Reliance Group’s strategy of raising capital through equity or equity-linked long term bonds will offer the group companies essential growth capital for their expansion plans.

In the past two weeks, both Reliance Infrastructure and Reliance Power have announced raising R4,500 crore through preferential issues of equity shares, and R7,100 crore from global investment fund, Varde Partners through equity linked long term FCCBs.

An additional R6,000 crore will be raised through Qualified Institutional Placement (QIP), with Reliance Power and Reliance Infrastructure each aiming for R3,000 crore. With resolutions in place, shareholder approvals are expected by the end of the month.

Even with a conservative debt-to-equity ratio of 70:30, raising over R17,000 crore in equity or equity linked bonds will provide the group companies a total investment outlay of R50,000 crore for their future business plans over the next few years, sources in the company said.

The fundraising will also boost the net worth of both companies to around R25,000 crore. According to stock exchange disclosures, both companies are raising R4,500 crore through preferential issues of equity shares. Of this, R1,750 crore will be invested by the promoters, while the remaining R3,750 crore is being contributed by four major investors, namely Fortune Financial & Equities Services, Florintree Innovations LLP, Authum Investment and Infrastructure, and Sanatan Financial Advisory.

In addition, Varde Partners is investing R7100 crore, through Equity linked Foreign Currency Convertible Bonds (FCCB). These equity linked FCCBs have a long maturity period of 10 years and low interest rate of 5%.

Fundraising to boost networth

Even with a conservative debt-to-equity ratio of 70:30, raising over C17,000 crore in equity or equity linked bonds will provide the group companies a total investment outlay of C50,000 crore for their future business plans over the next few years, sources in the company said. The fundraising will also boost the net worth of both companies to around C25,000 crore.