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Two companies belonging to Anil Ambani's Reliance Group, Reliance Infrastructure and Reliance Power, are poised for a significant resurgence in their fortunes. This optimistic outlook follows a series of positive developments, including a substantial fundraising effort and the achievement of a debt-free status, potentially paving the way for the once-beleaguered tycoon to return to the business landscape. According to reports from PTI, the companies have raised Rs 17,600 crore through a combination of equity and debt financing.
The fundraising initiative included a Rs 4,500 crore infusion through preferential equity shares. This amount was further supplemented by Rs 7,100 crore from Varde Partners, a global investment fund. Varde Partners' investment took the form of equity-linked foreign currency convertible bonds (FCCBs) carrying a 10-year maturity period and a low interest rate of 5%. The companies have also outlined plans to raise an additional Rs 6,000 crore through a qualified institutional placement (QIP), with each company aiming for Rs 3,000 crore.
This strategic capital injection is anticipated to serve as a catalyst for growth. According to a senior official within the Reliance Group, the strategy of raising capital through equity or equity-linked long-term bonds will provide the group companies with essential financial resources to execute their expansion plans. The fundraising efforts are anticipated to provide a total investment outlay of Rs 50,000 crore for the implementation of future business strategies. This injection of capital is expected to elevate the net worth of both companies to approximately Rs 25,000 crore.
The preferential equity share offering yielded Rs 4,500 crore, with Rs 1,750 crore contributed by promoters and the remaining Rs 3,750 crore secured from four key investors: Fortune Financial & Equities Services, Florintree Innovations LLP, Authum Investment and Infrastructure, and Sanatan Financial Advisory. Even considering a conservative debt-to-equity ratio of 70:30, the injection of over Rs 17,000 crore in equity or equity-linked bonds is projected to provide the group companies with a substantial investment outlay of Rs 50,000 crore for their future business ventures over the coming years. Varde Partners' investment of Rs 7,100 crore in FCCBs plays a pivotal role in the companies' funding strategy.
These equity-linked FCCBs are characterized by a long maturity period of 10 years and a low interest rate of 5%. Company officials have emphasized that these steps signify a strong financial backing for the ambitious growth plans of Reliance Infrastructure and Reliance Power. The combined fundraising efforts and the achievement of a debt-free status represent a turning point for Anil Ambani's Reliance Group. These developments indicate a renewed commitment to growth and a potential resurgence for the former tycoon's business interests.
Source: Anil Ambani companies eye big comeback on Rs 17,600-crore boost, debt-free status