Reliance Communications, India’s fourth-largest telecom operator, headed by billionaire Anil Ambani, recently raised Rs 4,800 crore (Rs 48 billion) from a share sale to institutional investors, the biggest QIP fund-raising by a private firm…
RCom, headed by billionaire Anil Ambani, which opened the qualified institutional placement (QIP) at a price of Rs 142.13 a share, got total bids of more than Rs 12,000 crore (Rs 120 billion), of which it retained Rs 4,800 crore (Rs 48 billion), sources said. RCom will also raise Rs 1,300 crore (Rs 13 billion) by issuing warrants to its promoters, which along with the QIP proceeds would go to trimming the firm’s huge debt. US funds snapped up major portion of offering while over 80 per cent contribution came from overseas bluechip funds.
This QIP is bigger than previous institutional fund raising by Adani (Rs 4,000 crore or Rs 40 billion) and GMR (Rs 3,966 crore or Rs 39.66 billion). After the QIP, promoter shareholding in RCom will drop to 60 per cent from 67 per cent while foreign holding will be 23 per cent. The fund raising will help the company reduce its debt that has doubled to Rs 40,177.6 crore (Rs 401.77 billion) in four years. Proceeds of QIP will be used to repay high cost rupee debt. Interest cost savings will be over Rs 800 crore (Rs 8 billion) per year, sources said.
RCom shares closed at Rs 151.40 on the Bombay Stock Exchange, marginally higher than previous close of Rs 151.35.
“The proceeds of the QIP offering and the preferential allotment will be used primarily for repayment of debt and deleveraging the balance sheet of the company,” RCom had said. RCom in a stock exchange filing recently stated that the promoters and promoter group entities would be entitled to as many as 8.67 crore shares (up to about Rs 1,300 crore or Rs 13 billion or $217 million) under the preferential allotment. The firm said in the filing that the floor price for the preferential allotment, based on the formula by Sebi, has been fixed at Rs 150 a share.