Shares of Reliance Power Ltd are in focus on Tuesday morning after the Anil Ambani-led company announced a preferential issue of 46.2 crore equity shares worth Rs 1,524.60 crore at a price of Rs 33 per share, which was at a 14 per cent discount to Monday's closing price for the stock. The issue is proposed to be made to promoter Reliance Infrastructure Ltd and non-promoter entities Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services Private Ltd (Sanjay Kothari and Meenakshi Sanjay Kothari.)
With this, Reliance Infrastructure would hold 24.88 per cent and the aggregate shareholding of the promoter group would be 24.95 per cent of the paid-up equity share capital of the company post the allotment of up to 18,31,00,000 equity shares. It owned 93,01,04,490 shares or 23.15 per cent in Reliance Power as on June 30.
Authum Investment and Infrastructure would own 6.59 per cent of the paid-up equity share capital of the company after the allotment of up to 21,82,00,000 equity shares. This company held 7,67,77,000 shares or 1.91 per cent stake in Reliance Power as on June 30.
Sanatan Financial Advisory Services Private Ltd would own 1.36 per cent stake in Reliance Power post the allotment.
On Monday, the Reliance Power stock closed at Rs 38.16 on BSE, up 4.98 per cent.
Reliance Power said it is a zero bank debt on standalone basis and looking poised to venture into new horizons of growth. In particular, Reliance Power intends to expand its presence in the renewable energy sector, directly and also through its special purpose vehicles and subsidiaries. In order to augment long term resources, enhancing networth and financial position, reduction of existing debt, ensuring long term viability and growth and expansion including to meet long-term working capital requirement and for general corporate purposes, it proposed to issue fresh capital into the company, to ensure enhancing of the shareholder value.
Reliance Power intends to use a substantial portion of the proceeds, Rs 803.60 crore, towards expanding its presence in the renewable energy sector and other new business opportunities, including meeting the long term working capital requirements.
For this purpose, the company will also make investment in or provide financial assistance to its subsidiaries, special purpose vehicles and joint ventures including in the form of equity, quasi equity, subordinated or unsubordinated debt (secured or unsecured).
A portion of the issue proceeds (i.e. Rs 340 crore) will be directed towards conversion of the existing debt availed by the company from Reliance Infrastructure Ltd and thereby reducing Reliance Power's existing debt. This is aimed to enhance Reliance Power's financial stability and improve cash flow, ultimately positioning it for sustainable growth in the future.
"Up to 25% of the issue proceeds will be utilised for general corporate purposes, including but not limited to meeting operational expenses, corporate exigencies and managing contingencies. These funds may also be directed toward improving the company’s financial health, enhancing net worth and reducing debt, ensuring long-term growth and stability," Reliance Power said.