Reliance Energy raises 178 mn via FCCB issue

Reliance Energy Ltd REL on Monday raised 178 million Rs 805 crore through a five-year zero-coupon foreign currency convertible bond FC...

Reliance Energy Ltd REL on Monday raised 178 million Rs 805 crore through a five-year zero-coupon foreign currency convertible bond FCCB issue. The FCCB issue is the largest ever out of India and the zero-coupon transaction 8212; a first 8212; would be converted into global depository receipts at a premium of 30 per cent to REL8217;s Monday8217;s closing price of Rs 775. This means the effective conversion price at the end of five years would be Rs 1,007 per share.

The response was overwhelming to say the least of a whopping 3.3 billion and closed two minutes short of an hour after lead manager Deustche Bank placed the deal for over 200 global institutional investors. Following this deal, REL8217;s fully diluted market cap would go up to Rs 16,000 crore from a paltry Rs 2,000 crore as on February 2003.

On the Bombay Stock Exchange, the REL stock opened at Rs 742.35 and touched the intra-day low of Rs 741. However, it shot up to the day8217;s best level of Rs 789.70, which was also its peak of last 52 weeks, before settling at Rs 774.55, gaining Rs 32.20 or 4.34 per cent over its previous close on the BSE. With the latest offering, REL has raised nearly 750 million or Rs 3,300 crore within a week, underscoring its strong financials.

8220;This is a reaffirmation of the strong future prospects for REL and the power sector in India,8221; said REL8217;s chairman Anil Ambani. REL recently announced a Rs 20,000-crore investment plan for the period 2004 to 2009. Earlier, on February 22, the power major had approved a preferential offer of equity shares and/or equity related securities to the Reliance group and major institutional shareholders to strengthen the company8217;s financial position. This move was targetted to generate large scale resources for accelerating its future growth plans. In line with the market guidelines, REL had planned the preferential offer subject to the necessary approval at Rs 640 per share.

The Reliance Group has planned to subscribe to over two crore equity shares of the company aggregating Rs 1,400 crore, while major institutions like the Life Insurance Corporation and the General Insurance Corporation have in-principle agreed to subscribe to nearly one crore shares aggregating Rs 600 crore.

Following the preferential offer, the Reliance group8217;s shareholding in REL would increase to 53 per cent as against the existing 49.5 per cent. The group8217;s holding earlier had come to 49.5 per cent from a peak of 58.2 per cent upon the full conversion of 120 million Rs 580 crore FCCBs. The erstwhile BSES Ltd had issued the FCCBs in October 2002.