Reliance Infrastructure Announces Major Equity Shares Issue
Reliance Infrastructure, a leading player in the infrastructure sector, has made a significant move to enhance its capital structure. On September 19, the company announced that its board of directors has approved a preferential issue of equity shares totaling Rs 3,014.4 crore. This strategic decision aims to bolster the equity stake of the promoters and raise necessary capital for future growth.
Details of the Preferential Issue
The preferential issue consists of 12.56 crore shares or convertible warrants priced at Rs 240 per share. The recipients of this issuance will include the promoter group company Raise Infinity Private Limited, as well as several investors like Florintree Innovation LLP and Fortune Financial and Equities Services Private Limited.
Purpose of the Capital Raise
The primary objective behind this preferential issue is to strengthen the promoter’s equity stake in Reliance Infrastructure. The company has indicated that the funds generated from this initiative will be allocated towards expanding business operations, which encompasses investments in subsidiaries and joint ventures. Additionally, the capital will be used to meet long-term working capital requirements and for general corporate purposes. This move follows the company’s prior announcement regarding a review of a potential preferential share issue to garner new capital.
Financial Impact and Shareholder Approval
With the execution of this preferential issue, Reliance Infrastructure is expected to see an increase in its net worth, rising from Rs 9,000 crore to Rs 12,000 crore. To facilitate this process, postal ballot notices will be dispatched to shareholders to secure their approval for the proposal. It’s noteworthy that in July 2021, the company previously raised Rs 550 crore through a similar preferential issue, with promoters investing Rs 400 crore and Varde Capital Partners contributing Rs 150 crore.
Market Response
On the day of the announcement, Reliance Infrastructure’s stock closed nearly unchanged at Rs 282.80. This stability suggests a cautious yet optimistic market response to the planned capital expansion as the company aggressively pursues its growth objectives.
| Aspect | Details |
|---|---|
| Issue Size | Rs 3,014.4 crore |
| Number of Shares/Warrants | 12.56 crore |
| Issue Price per Share | Rs 240 |
| Promoter Group Involved | Raise Infinity Private Limited |
| Additional Investors | Florintree Innovation LLP, Fortune Financial and Equities Services Private Limited |
| Previous Fundraising | Rs 550 crore in July 2021 |
In conclusion, Reliance Infrastructure’s latest capital raise through a preferential equity issue marks a pivotal step in the company’s strategic growth plan. As it prepares to enhance its market position, stakeholders will be closely monitoring the upcoming shareholder responses and the firm’s execution of its expansion strategy.
