India’s largest private sector company Reliance Industries is set to raise $1.75 billion from investors by this week-end with bankers saying the issue has received good response while it was marketed abroad.
The company has hired 19 banks to sell the loans in Japan, Singapore, Hong Kong and even to Taiwanese investors. A top team of Reliance alongwith bankers are meeting investors across Asia this week. Of the $1.75 billion loan, $1.2 billion is in multi-currency while $500 million is in US dollar, a banker said.
Reliance officials refused to comment on the issue.
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A banker said, Reliance will use part of the loan to replace its earlier loans and to fund its expansion. The company is planning to invest $24 billion in its core petrochemicals, oil and gas business.
Apart from State Bank of India, ANZ, BofAML, Barclays, Bank of Tokyo-Mitsubishi UFJ, Bank of Nova Scotia, BNP Paribas, Citigroup, CBA, Credit Agricole, DBS Bank, DNB, HSBC, Mizuho, RBS, StanChart, Sumitomo Mitsui Banking Corp., Westpac and UOB are managing the issue.
The Mukesh Ambani company aims to transform the scale and scope of its downstream business over the next 15-18 months and a $12 billion investment would nearly double its petro chemicals capacity via a refinery off gas cracker.
Analysts say with most of its earnings linked to US$, RIL benefits from the INR’s depreciation and its earnings per share will go up by 6% in FY14. Its domestic sales of refined products, petchem products and oil and gas sales are all benchmarked to US dollar. Hence, RIL is among the beneficiaries of the INR's slide.
This does however also increase debt, as the bulk of RIL's debt is forex denominated.
Like many other groups like Essar, Reliance is also converting its bulk of local loans into dollars.