Anil Ambani-led Reliance Communications Ltd on Wednesday raised over Rs. 6,100 crore from the sale of shares to institutional investors, in the biggest fund raising through a secondary issue by an Indian company. The move is aimed at paring its Rs. 40,177.6-crore pile of debt, including an interest cost saving of Rs. 800 crore per year.
India's fourth-largest telecom operator will raise Rs. 1,300 crore by issuing warrants to promoters, which along with qualified institutional placement (QIP) proceeds of Rs. 4,800 crore, would help the firm pare its huge debt. The promoters will pay also pay a 5% premium to the QIP price.
QIP is a capital-raising process in which a listed company can issue equity shares, fully and partly convertible debentures, or any securities, other than warrants, which are convertible to equity shares to a qualified institutional buyer. The Securities and Exchange Board of India allows an Indian company to issue securities in India without providing preliminary filings in the QIP process.
The previous records in private sector QIPs in India (non-banking) were from the Adani Group (Rs 4,000 crore) and GMR (Rs 3,966 crore).
The RCom board had approved a QIP offering of Rs. 3,000 crore on Tuesday after market hours. The offering was fully covered within two hours after it hit the market.
US funds snapped up a big portion of the offering while orders also poured in from Singapore and Hong Kong. According to sources, there was an overwhelming response from investors in the US, West Asia and Asia.
RCom, which opened the QIP offering at a price of Rs. 142.13 a share against the stock's closing price of Rs. 151.35 on the BSE on Tuesday, received total bids worth over Rs. 12,000 crore, of which it retained Rs. 4,800 crore, sources said. RCom's shares closed at Rs. 151.40 on Wednesday against Tuesday's Rs. 151.35 on the BSE.
Analysts said other companies are also likely to hit the market soon on the back of optimism riding on the NDA government's resounding victory in the polls.