Reliance Power to raise Rs 1,325 cr from RInfra via preferential allotment

Reliance Infra stake to go up to 38% from 9%; more fund raising planned

Reliance Power Limited today announced that it will raise Rs 1,325 crore by issuing preferential shares and warrants to its parent, Reliance Infrastructure. Post conversion, combined stake of Reliance Infrastructure and other promoters will rise from the current nine per cent to around 38 per cent. 

Reliance Power will issue upto 59.5 crore equity shares and upto 73 crore warrants convertible into equivalent number of equity shares at Rs. 10 each by conversion of debt, to Reliance Infrastructure.

The pricing is at a 21.5 per cent discount to Reliance Power's share price of Rs 12.74, as per Friday's closing on BSE. 

With this, Reliance Power's standalone debt will reduce by Rs 1,325 crore and along with its other planned debt reduction in subsidiaries, its consolidated debt will further fall by Rs 3,200 crore in FY22, which will reduce its debt-equity ratio to 1.80:1, a company statement said after its board meeting today.

Reliance Infrastructure and other promoter holding in Reliance Power will increase upto 25 per cent after issue of equity shares and will further increase to over 38 per cent on conversion of warrants. As of now, the promoter owns 9.06 per cent stake in Reliance Power, as per statistics submitted to the stock exchanges for the quarter ending March this year.

The Board in a meeting held today also approved plans to issue foreign currency convertible bonds (FCCBs); and raising funds by issuing securities to qualified institutions. The proposed size of FCCB issue is up to 50 per cent of the then networth of the Company, and QIP's upto 25 per cent of the then networth.

Reliance Power runs power plants based on coal, gas and renewable energy, with an operating portfolio of 5,945 megawatts.

On June 6, the Board of Reliance Infrastructure  had announced that it will raise up to Rs 550.56 crore from its promoter, the Anil Ambani family and and Varde Investment. Of this, the Anil Ambani family will invest Rs 400 crore – raising its stake from 5 per cent to 23 per cent while the rest will be invested by Varde Partners for a seven per cent stake.  It plans to raise creeping acquisition.

Various Anil Ambani group companies including Reliance Communications and Reliance Naval and Engineering Ltd were dragged to the bankruptcy courts by the Indian lenders after they failed to repay their debt. While Mukesh Ambani’s Reliance Industries has emerged as the highest bidder for Reliance Infratel, a subsidiary of Reliance Communications, UV Arc has emerged as the highest bidder for Reliance Communications.

The RBI later clarified that asset reconstruction companies cannot bid for companies in the bankruptcy courts and the offer by UV ARC  is currently pending. Reliance Naval failed to find any buyers despite breaching deadlines set under the IBC.