Anil Ambani is building a war chest for his group's energy-based resources undertaking, Reliance Natural Resources Ltd, and the operating company of his telecom business, Reliance Communication Ventures Ltd.
Reliance Natural Resources has convened a board meeting tomorrow aimed at raising capital through allotment of preferential shares, while the Reliance Communication board will decide on an issue of foreign currency convertible bonds next Tuesday.
Sources close to the developments said, going by the instances of Reliance Capital and Reliance Energy, Reliance Natural Resources might place preferential shares to the promoters.
The funds will be utilised to strengthen the capital base of the company, which has an equity share capital of Rs 611.56 crore (Rs 6.12 billion). Its equity capital comprises 122.3 crore (1.22 billion) shares of Rs 5 each. The promoters have a 40.54 per cent stake.
Reliance Communication informed the stock exchanges that the FCCBs would be issued at a premium to the ruling market price.
The issued share capital of Reliance Communication will be Rs 1,022 crore (Rs 10.22 billion), post the reorganisation of the telecom business of the group. With this, promoters' holding will go up to 63 per cent from the present 40.54 per cent.
Industry sources said the proposed move of Reliance Communication to issue FCCBs meant that the group would take some time to launch the company's initial public offer.
They added that the proceeds of FCCBs would be utilised to fund Reliance Communication's expansion plans. This includes strengthening its presence in the country and adding on subscribers for its CDMA and GSM operations. The company's telecom business has a total of 18.3 million subscribers.
Reliance-Anil Dhirubhai Ambani Group Chairman Anil Ambani had recently announced that Reliance Communication would invest Rs 15,000 crore (Rs 150 billion) in three years. The investment was to be funded through a mix of debt and internal accruals.
"Reliance Communication Ventures Ltd will require Rs 2,500 crore (Rs 25 billion) a year for its wireless operations, Rs 1,500 crore (Rs 15 billion) for broadband operations, Rs 1,000 crore (Rs 10 billion) for global operations and Rs 500 crore (Rs 5 billion) for common servicing assets," Ambani had said.
The Rs 5,000-crore (Rs 50 billion) capex will be used for expanding its CDMA business network to over 4,500 towns from the present 2,000 towns (which will be completed in months). It will also be used for expanding its GSM operations, and for roping in both enterprise and retail customers for its broadband business.
The company, which had recently acquired insurance firm AMP Sanmar for around Rs 100 crore (Rs 1 billion), had also earmarked a capex of Rs 1,000 crore (Rs 10 billion) for the next "two to three years" in the insurance business.
This will be the second instance of the group raising funds. Immediately after the June 2005 settlement with his elder brother Mukesh, Anil Ambani announced an infusion of Rs 3,000 crore (Rs 30 billion) in his group companies.
The group's financial services company, Reliance Capital, received Rs 2,000 crore (Rs 20 billion), while the power outfit, Reliance Energy, got Rs 1,000 crore (Rs 10 billion).Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
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