Powering Up: Reliance Power Unveils ₹90,000 Crore Capital Drive

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Reliance Power Ltd declared a ambitious two-part fund-raising strategy to strengthen its financial muscles and power future growth. It will raise up to ₹60,000 crore through equity issues and another ₹30,000 crore through debentures.

Equity Infusion: Strategic Expansion and Debt Repayment

Reliance Power board has approved a preferential allotment of up to 46.2 crore equity shares and/or warrants convertible into equity shares at ₹33 per unit for ₹1,524.60 crore in the initial phase. The key points are

Promoter Reliance Infrastructure to pump in more than ₹600 crore, raising holding substantially

The other investors are Sanatan Financial Advisory Services and Authum Investment

Proceeds reserved for:

Expansion into emerging business sectors and into renewable energy

Investment in joint ventures and subsidiaries

Debt reduction and corporate purposes overall

Net worth to increase from ₹11,155 crore to ₹12,680 crore

Zero bank debt by company increases financial flexibility

Issue of Debenture: Long-Term Capital Support

Reliance Power also plans to raise ₹30,000 crore in secured, non-convertible debentures. While specifics of each tranche are due, previous issuances have comprised:

Coupon returns of around 8% with far maturity (say, 2035)

Private placement method with collateralized security

High-risk profile ICRA ratings, reflecting intention to refinance or restructure

Market Impact and Outlook

The development provided a boost to investor confidence, and the stock hit a 52-week high. The fund raising is indicative of Reliance Power's transition to become a leaner, greener, and bolder energy player.

Sources: Livemint, Economic Times, Business Today, Outlook Business, Dezerv.in