Indian billionaire Reliance Industries Ltd. plans to raise up to Rs 20,000 crore ($2.4 billion) through domestic rupee-denominated bonds maturing in 10 years, according to RIL's issue document.
If the issue floated by Reliance is successfully sailed and able to raise the entire amount of Rs 20,000 crore through the issuance, it would mark the largest ever fund-raising through bonds by an Indian corporate beyond the traditional lending sector of banking and financial services.
Last year, HDFC raised Rs. 25,000 crore through bonds as the housing financier looked to garner funds ahead of its merger with HDFC Bank.
The bonds are partly paid, secured, redeemable, and non-convertible debentures and are ranked equal to existing or future secured loans or NCDs issued or to be issued by Reliance.
According to ET, the sale of non-convertible debentures (NCD) will take place through the electronic book mechanism on the BSE's bond platform on November 9. The issue has a base size of Rs. 10,000 crore and a green shoe option of Rs. 10,000 crore. The company intends to issue 20 lakh debentures at a face value of Rs 1 lakh per debenture.
The entire net proceeds of the debenture issue will be used for refinancing existing borrowings maturing this year, as well as for ongoing capital expenditure requirements, investments, or lending to domestic subsidiaries where Reliance holds a majority stake. Up to 25% of the net proceeds could also be used for "any other purpose in the ordinary course of business."
Reliance's fundraising comes at a time when systemic liquidity in the banking system is in deficit, and market participants expect the reversal in the Reserve Bank of India's policy rates to happen later than expected.
The fund-raising plan comes at a time when Rel Jio, India's top telco, has been rapidly expanding 5G networks and looking at countrywide coverage in a few months. The company is venturing into new areas like green energy and financial services. Reliance foray into consumer-facing businesses has led Reliance to embark on fresh fundraising. Its retail arm sold a stake to the Qatar Investment Authority this year, and the division won an investment from KKR & Co.
Reliance Industries has an AAA credit score from India's Crisil Ratings, similar to the local assessor's grading for Tata Sons Pvt.
Reliance Industries reported its July–September 2023 Q1 results, reporting a 27% increase in net profit to Rs 17,394 crore. The consolidated revenue for the quarter was Rs 2.31 lakh crore, boosted by growth in fashion, lifestyle, grocery, and e-commerce. The company's resilient performance in the O2C segment was attributed to strong growth in fuel demand in a supply-constrained market. The growth of the oil and gas business is particularly noteworthy, with production from the KGD6 block ramping up and providing valuable fuel for the energy transition in the Indian economy.