The Anil Ambani-led Reliance Group plans to seek shareholders’ nod to raise funds, estimated at about Rs 15,000 crore at current valuations, through equity dilution of up to 25 per cent in four of its companies.
The companies include Reliance Communications, Reliance Power, Reliance Infrastructure and Reliance Capital. Shareholders’ approval to enabling provisions for raising funds from institutional investors would be sought at the annual general meetings (AGMs) of these firms next month.
All four companies will hold their AGMs on September 4, where shareholders’ nod would be sought on these matters, among other issues, but approvals have been taken for such enabling provisions in the past as well without any actual equity dilution having taken place. When contacted, a Reliance Group spokesperson said these were only enabling resolutions and there were no concrete plans under way at any of the four companies.
“As clarified in the explanatory statement attached to the notice, these are merely enabling resolutions taken as per usual practice at our AGMs every year, in the interests of maintaining financial flexibility.
“There are presently no plans by any of our group companies, namely, RCap, RCom, R-Infra or RPower to make any fresh issue of capital,” the spokesperson said.
Individually, RCom said in its AGM notice to shareholders it would seek their approval for authorising the board to issue equity shares, convertible debentures or other such securities, to qualified institutional buyers to the tune of up to 25 per cent stake in the company.
The other three firms, RPower, R-Infra and Reliance Capital, would also seek approval of their shareholders for similar resolutions, they said in their respective AGM notices.
According to current market valuations of the four companies, equity issuance of up to 25 per cent stake in each of them could fetch close to Rs 15,000 crore. The four firms command a cumulative market value of about Rs 60,000 crore.
The combined cash position of these firms at consolidated level more than halved to nearly Rs 4,000 crore at the end of the last fiscal 2011-12, from over Rs 8,300 crore a year ago. Another group company, Reliance MediaWorks recently said its board has approved raising funds up to Rs 600 crore by way of rights issue of its equity shares to its shareholders. Besides, it has also signed a term sheet with a global private equity fund, which would acquire "a substantial minority stake in Reliance MediaWorks' Film and Media Services division for an investment of Rs 605 crore." Reliance Group has previously raised nearly USD 7 billion from financial markets globally in less than three years, but some of its recent attempts, such as a Singapore listing of RCOM's undersea cable arm and equity sale in its telecom tower unit could not materialise due to adverse market conditions.