Anil Ambani’s Reliance Group in recent years has seen marquee companies being auctioned off in insolvency proceedings and piling up debt-ridden businesses. But the group, last week, made announcements that investors believe could mark its transformation.
In three days — from September 18 to September 20 — the group announced that it was almost at zero and was implementing long-term fundraising plans that were said to strengthen its financial position.
The board of Reliance Infrastructure has approved fund raising of up to Rs 6,000 crore through a special issue and QIP, while the board of Reliance Power is meeting on September 23 to consider and approve fund raising through multiple routes.
The speed with which Anil Ambani moved to clear the debt of his companies, and at the same time announced and made plans to increase the fund for the expansion of his companies in the future, surprised the investors.
Shares of both firms are listed on the stock market.
The announcement to invest Rs 1,100 crore by a group of promoters in Anil Ambani’s flagship company, Reliance Infrastructure, has also boosted investor confidence in the group’s revival plans and its long-term growth story, investors said.
They feel that Anil Ambani’s twin strategy of debt reduction, coupled with fresh capital raising, has set the stage for long-term reforms of the Trust Group.
Reliance Infrastructure’s market capitalization at the end of this week rose nearly 50 percent, from Rs 8,500 crore to Rs 12,500 crore.
Similarly, Reliance Power’s market capitalization increased by 25 percent, from Rs 11,500 crore to Rs 14,600 crore.
Reliance Infra has announced a major reduction in its external debt, bringing it down from Rs 3,831 crore to just Rs 475 crore. This was achieved by offloading outstanding funds from prominent lenders such as Life Insurance Corporation of India (LIC), Edelweiss ARC, ICICI Bank, and Union Bank, according to company details.
This move reflects the strong financial stability and improves the financial flexibility of Reliance Infra.
Also, Reliance Infra’s board approved a special issue to raise Rs 3,014 crore, increasing the stake of Risee Infinity Pvt Ltd, a group of promoters, along with other investors such as Flointree Innovation LLP and Fortune Financial & Equities Services Pvt Ltd.
The board also approved seeking shareholders’ approval to raise another Rs 3,000 crore through institutional placements.
This will provide additional capital to strengthen the balance sheet and invest in new growth opportunities.
With this infusion of funds, the net worth of Reliance Infra is expected to increase from over Rs 9,000 crore to over Rs 12,000 crore, according to the filing.
The company is now well-positioned to invest in high-growth sectors, investors say.
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First published: Sep 23 2024 | 12:54 AM IST