.jpg)
Synopsis : Reliance Power has announced a preferential issue worth Rs1,524.60 crore, issuing 46.2 crore shares at a 14% discount. The proceeds will be used to reduce debt, expand into renewable energy, and support the company's long-term growth. With Reliance Infrastructure's stake set to rise to 24.88%, the company is poised to enhance its financial stability and shareholder value. A portion of the proceeds will also be allocated to general corporate purposes and working capital needs, positioning Reliance Power for sustained growth in new business opportunities.
Key Allotments and Stakeholding
After this preferential issue, Reliance Infrastructure will hold a 24.88% stake in Reliance Power, and the promoter group's total shareholding will reach 24.95% of the paid-up equity share capital. This includes the allotment of up to 18.31 crore equity shares. As of June 30, Reliance Infrastructure already held a 23.15% stake in Reliance Power.
Authum Investment and Infrastructure Ltd will own 6.59% of Reliance Power post the issue, acquiring up to 21.82 crore equity shares. Previously, Authum held 1.91% of the company's shareholding. Additionally, Sanatan Financial Advisory Services Private Ltd will own a 1.36% stake after the allotment.
On Monday, Reliance Power's stock closed at Rs38.16 on the Bombay Stock Exchange (BSE), marking a 4.98% rise, further bolstering investor sentiment around the stock.
Strategic Focus on Renewable Energy and Debt Reduction
Reliance Power has announced its strategic focus on expanding into renewable energy, supported by the proceeds from the preferential issue. The company aims to utilize Rs803.60 crore of the funds raised to grow its presence in the renewable energy sector through its subsidiaries and special purpose vehicles (SPVs). This move aligns with the company's broader goal of transitioning into new growth areas while boosting long-term financial stability.
Reliance Power's management has stated that a portion of the proceeds, amounting to Rs340 crore, will be used to convert existing debt owed to Reliance Infrastructure Ltd. This is aimed at reducing the company's debt load, improving its financial standing, and enhancing cash flows, ultimately positioning Reliance Power for sustainable future growth.
Furthermore, the company has committed to utilizing up to 25% of the proceeds for general corporate purposes. These funds will support operational expenses, corporate contingencies, and will contribute to reducing existing debt, thus ensuring long-term stability and value for shareholders.
Proceeds Allocation and Growth Objectives
The capital raised from the preferential issue will be directed toward:
Expanding into renewable energy and new business opportunities.
Reducing debt, particularly the Rs340 crore owed to Reliance Infrastructure.
Enhancing long-term working capital and general corporate purposes.
Supporting subsidiaries and SPVs through investments or financial assistance, ensuring financial strength and operational growth.
Reliance Power has emphasized that its standalone operations have zero bank debt, reflecting the company's efforts toward maintaining a lean financial structure. The current strategy reflects a broader ambition to secure a stronger position in the energy sector, with a specific focus on renewable energy and long-term corporate growth.
Disclaimer : This article is based on the company's public announcements and financial strategies. Investments in stock markets are subject to risks, and it is recommended to consult financial advisors for professional guidance before making investment decisions.
