The board of Reliance Infrastructure has approved the issue of up to 42.9 million preferential shares to its promoters and investors in order to raise approximately INR43 billion ($919 million; €657 million).
The shares will be offered at INR1000 per share and the offer is subject to approval by shareholders. The new capital will up Reliance-Anil Dhirubhai Ambani Group’s stake in the company to 48 percent from 38 percent, according to a company statement.
The capital injection will boost Reliance Infrastructure’s net worth to more than INR160 billion. It will also increase its borrowing capabilities to INR320 billion, at a 2:1 debt-equity ratio. This will enable the company to participate in larger road, power, rail and port projects, the company said.
Reliance Infrastructure develops roads, metro systems, specialty real estate such as business districts and special economic zones. It is also involved in the generation, transmission, distribution and trading of electricity as well as the construction of power plants.
The company is presently developing 11 infrastructure projects worth INR128 billion. Among these are five road projects in Tamil Nadu spanning more than 400km in length.
Reliance Infrastructure’s board also approved the cancellation of 43 million equity warrants issued in January 2008 to its promoters. The promoters’ payment of INR7.83 billion against these warrants has accrued directly to the company’s reserves, according to the statement.
The government of India estimates that the country requires $475 billion in infrastructure investment by 2012.
Reliance could not be reached by press time.