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Mukesh to market with mega issue

Mumbai, Jan. 23: Just five days after Brothers Ambani formally demerged their businesses, older scion Mukesh Ambani is getting ready to rock the capital market with a blockbuster equity issue.

The board of directors of Reliance Industries today cleared plans for an equity issue by newly created Reliance Petroleum Ltd (RPL) that will raise funds for the $6-billion (Rs 27,000 crore) refinery to be set up at a special economic zone in Jamnagar.

It will have a capacity of 27 million tonnes a year. RPL is a wholly owned subsidiary of Reliance Industries.

The RPL issue will raise between Rs 5,000 and 6,000 crore ' making it the largest-ever flotation by the Ambanis and marking their return to the capital market after 12 years.

The issue is expected to open anytime after April. Sources said a part of the issue would be earmarked for Reliance Industries’ 3.3 million shareholders, but there would be no preferential pricing for them.

“The proposed IPO by RPL brings out the unique strategy of creating value for the new shareholders while, at the same time, unlocking value for existing shareholders of RIL,” the company said.

In 1993, Reliance Petroleum Ltd ' a coincidental namesake ' raised Rs 2,172 crore to fund a greenfield refinery in Jamnagar with a capacity of 18 million tonnes. A series of expansions followed and the refinery now has a capacity of 33 million tonnes. The issue was the biggest in Indian corporate history till it was outgunned by the Rs 10,500-crore ONGC flotation in March 2004.

The original Reliance Petroleum merged with RIL in 2002, leading to the creation of India’s largest private sector company.

The RIL board also cleared a $750-million (Rs 3,300 crore) foray into retailing that will involve the establishment of hypermarts, super markets and convenience stores across the country.

The new RPL will be headed by Mukesh and its board of directors will comprise Manoj Modi and P.M.S. Prasad, the head of the group’s petroleum businesses.

The new $6-billion refinery will be funded through debt of $3.5 billion (about Rs 16,000 crore) and equity of $2.5 billion (Rs 11,000 crore). If the public issue is up to Rs 6,000 crore, the rest will be held by RIL.

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