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Reliance Infratel files plans for Rs 5,000 cr float

The draft red herring prospectus is filed today and sources say that the float would aim to raise approximately Rs 5,000-6,000 crore, reports Suman Layak.

business Updated: Feb 04, 2008 22:30 IST
Suman Layak
Suman Layak
Hindustan Times

The Anil Dhirbuhai Ambani Group on Friday filed for the initial public offering of Reliance Infratel Ltd. The draft red herring prospectus was filed today and sources said that the float would aim to raise approximately Rs 5,000-6,000 crore.

The filing comes just a couple of days after the group has completed the allotments for the Reliance Power Ltd IPO, the largest ever in India. Reliance Power will be listed on the bourses on February 11 and raised more than Rs 11,000 crore. The move displays a high level confidence as public offerings, like Emaar and Wockhardt Hospitals, that followed Reliance Power had to reduce their issue price a few days prior to the issue opening. Before deciding in favour of an IPO

The offer of 8.9 crore equity shares with a face value of Rs 5 is likely to be priced around Rs 550-650 range going by the amount of money that the company is expected to raise.

The issue will offer 10.05 per cent shares of Reliance Infratel and the post issue holding of the promoters will be 85 per cent. Currently institutional investors hold a 5 per cent stake in the company while the rest is held by different companies of the group. The largest shareholder is Reliance Communications Infrastructure Ltd at 79.71 per cent. This company is a wholly owned-subsidiary of Reliance Communications Ltd. Reliance Communications scrip moved up sharply – 11.96 per cent to Rs 685 and was the highest gainer among Sensex stocks and fifth highest gainer in Group A stocks.

The IPO is likely to hit the markets by the end of the current financial year and company will be spending around Rs 4300 crore in the financial 2008-09 for rolling out 16,000 towers. Around 1100 towers will be built in metropolitan areas while the remaining 15,000 will come in A, B and C circles all across the country.

The issue comes at a time when quite a few operators are starting up in new circles with GSM and Reliance Communications too has been allotted GSM Spectrum. Macquarie Bank recently said in a report on Reliance Infratel that the company is likely to ramp up its number of towers to almost 85,000 towers by 2012 and that volume growth will drive its business. It also said that the business has high entry barriers and on the other hand revenues are almost like annuities.