| BSES chief Anil Ambani in Mumbai on Sunday. (Reuters)
Mumbai, Feb. 22: Anil Ambani today announced a Rs 20,000-crore power investment blitz that will be part-funded through a preferential offer worth Rs 3,000 crore in BSES.
The man who breasted the tape in a recent Mumbai marathon said the fund-infusion puts the Mumbai utility in the race for becoming India’s top energy producer.
Ambani, who is the BSES chief besides being Reliance vice-chairman, said fresh funds will flow into generation, transmission, distribution and trading. The plans came along with a new catchword — Energy is Life.
To part-finance the investments, Reliance Energy, which is what BSES will be called now, announced a preferential offer of equity shares and equity-related instruments to the Reliance group and institutions at Rs 640 apiece. That is a premium of 38 per cent on BSES’ 26-week average price, but a discount of around 2 per cent to the closing price of Rs 655 per share on Friday.
Reliance Industries Ltd (RIL) and Reliance Capital will subscribe to over 2 crore BSE shares worth Rs 1400 crore. Institutional shareholders, LIC and GIC, will pick up nearly 1 crore shares valued at Rs 600 crore. This is likely to keep the institutions’ stake at 21 per cent.
In addition to that, Reliance is ready to lap up shares and/or shares with differential voting rights and/or an international convertible bonds of Rs 1000 crore. Issuing shares that carry no voting rights, but offer a dividend that is 5 per cent higher than ordinary shares, will benefit Reliance shareholders, Ambani said. The average cost of Reliance’s stake in Reliance Energy will still be Rs 350, even after the proposed investment, compared with the current market price of Rs 655.
The preferential offer will raise the group’s holding in Reliance Energy to 53 per cent. It will go up to 56.5 per cent if the additional Rs 1000 crore is finally pumped in.
A Rs 10,000-crore project that Reliance will set up in UP’s Dadri Dadri will soak up bulk of the fresh funds. The project — the foundation-stone for which was laid earlier today by Ambani — is being implemented by a new firm called Reliance Egen. Reliance Energy will own 51 per cent of it while the rest will belong to the promoters.
Reliance Energy’s two distribution companies in Delhi will spend around Rs 3,500 crore on systems development to improve the quality of supply. In Orissa, the company intends to invest Rs 2,500 crore in its network.