Reliance Cap Plans Rs 200-Cr Debt Issue
This move by the finance company comes after Reliance Industries (RIL) embarked on a major resource drive in the international market to mop up resources. RIL has garnered over Rs 5,000 crore in the international market during the present fiscal.
Credit Analysis and Research (CARE) has already assigned a AAA to the bond programme of the company.
According to sources, the company is not planning to go in for a public issue to raise funds through bonds. The money is likely to be raised through the private placement route, a source disclosed. The company picked up Rs 46.32 crore through private placement of bonds in 1995-96, and according to sources, it will hit the debt market in tranches of 50 crore to raise the funds this year.
Incidentally, for private placement, the company need not get its bonds rated. But the company might be targeting the top institutional investors to buy the bonds which is why they have gone for a rating, a merchant banker said.
The private placement route is turning out to be lucrative for the finance companies. A large number of finance companies have lined up debt issues which will be privately placed, another merchant banker added. Leading the pack is GE Capital, which is once again poised to hit the debt market with a Rs 60-crore issue.
Finance companies are offering yields significantly higher than those on PSU bonds, which is prompting these companies to tread the private placement route, a source said.
Reliance Capital has already received the permission from the finance ministry to privately place US $100 million with foreign institutional investors. A company official said, the private placement of equity will be done at a favourable time.
The conversion of securities issued or allotted is likely to enhance the paid-up capital of the company by 25 per cent of the authorised share capital at that point of time.
Reliance Capital will also divest its stake in three of its subsidiaries. These are Reliance Safe Vaults & Securities, Reliance Stock Holding and Reliance Research & Management (RCAM). The company is doing this due to the various constraints arising out of the guidelines framed by the Securities and Exchange Board of India.