Anil Ambani ups stake in R-Infra

Company raises Rs 1,821 crore, promoter group stake rises to 42%.

A Reliance Anil Dhirubhai Ambani Promoter Group company AAA Project Ventures today invested Rs 1,821 crore in equity shares of Reliance Infrastructure. About 19.6 million equity shares were allotted to AAA Project Ventures by Reliance Infra, against convertible warrants issued to it earlier.

This new equity infusion increases the holding of promoters in the company to 42.73 per cent from 37.74 per cent earlier. In July 2009, the board of Reliance Infrastructure allotted 42.9 million convertible warrants to AAA Project Ventures, entitling them to one equity share of Rs 10 per warrant, at an issue price of Rs 929 per share. The issue price was calculated from regulatory guidelines.

After converting the balance warrants, the promoter group’s holding would go up to 48 per cent. The timing of this conversion has not been indicated. The effective purchase cost to the promoter group comes to Rs 1,112 per share. This takes into account the upfront payment of Rs 783 crore already received on warrants issued earlier but cancelled.

This equity capital infusion would increase the net worth of Reliance Infrastructure to Rs 16,000 crore. The company claimed its borrowing capabilities would be further augmented to Rs 32,000 crore, at a debt:equity ratio of 2:1. This would ensure the company can participate in more growth opportunities, as higher debt could be raised.

“Reliance Infra will need more money for asset ownership. This equity can be used for the projects that they have already have in their kitty. This will also help them to bid for more projects,” says a Mumbai-based equity analyst who tracks the company.

Reliance Infra is developing 15 projects aggregating around Rs 28,000 crore in various sectors like roads, transmission projects and metro rail projects. The company has bagged Mumbai Metro Line I and II, and the Delhi Airport Metro Express Line. It has planned to commission seven of these 15 projects, accounting to over Rs 10,000 crore, in 2010-11.

The stock of Reliance Infrastructure went up by 1.7 per cent in today's trade, to close at Rs 1,015.60 per share.