Reliance Power hits 5% lower circuit as board okays $500 mn fundraise

Reliance Power's share price was locked in 5 per cent lower circuit at Rs Rs 40.06 a piece on the BSE. The decline was followed by the company’s announcement to raise funds from affiliates of US based Värde Investment Partners. 

The company’s board of directors has approved a fundraise of $500 million (approximately Rs 4,200 crore) through the issuance of foreign currency convertible bonds (FCCBs). These bonds will be offered on a private placement basis to a US company, featuring a low interest rate of 5 per cent per annum and a tenure of 10 years. The FCCBs are unsecured in nature, the company said in an exchange filing on Thursday.

The FCCBs will be convertible into approximately 82.30 crore equity shares at a nominal value of Rs 10 each, with a conversion price set at Rs 51 per share, which includes a premium of Rs 41. The allotment of these FCCBs is expected to occur within 30 days from the issue closing date. The total issuance will consist of up to 500 FCCBs, each valued at $1,000,000, aggregating to a total of $500,000,000.

The unlisted FCCBs will have a tenure of 10 years and 1 day from the date they are fully paid up, offering a low interest rate of 5 per cent per annum.

Earlier on September 24, 2024, the company’s boards also gave nod for a fundraiser of Rs 1,524.60 crore through a preferential issue of up to 46.20 crore equity shares, priced at Rs 33 each. Reliance Infrastructure Limited, the company's promoter, aims to increase its equity stake by over Rs 600 crore. Other notable investors participating in this preferential issue include Authum Investment and Infrastructure Limited and Sanatan Financial Advisory Services Private Limited.

The funds raised through this issue will be allocated towards business expansion, investments in subsidiaries and joint ventures, debt reduction, and general corporate purposes, the company had disclosed previously.  

In its latest financial report for the quarter ended June 30, 2024 (Q1FY25), Reliance Power narrowed its consolidated net loss to Rs 97.85 crore, significantly improved from the Rs 296.3 crore loss recorded in the same quarter last year. This reduction in losses was attributed to increased revenue and reduced expenses, with total revenue rising by 6 per cent to Rs 2,069.1 crore, largely driven by an uptick in other income.

Currently, Reliance Power shares trade at a price-to-earnings (P/E) ratio of 316.18, with an earnings per share (EPS) of Rs 0.17. The company’s stock has experienced a 52-week range, with the highest price at Rs 54.25 and the lowest at Rs 15.53.

Established as Reliance Energy Generation Limited, Reliance Power is a key player in the Reliance Anil Dhirubhai Ambani Group, focusing on developing, constructing, operating, and maintaining power projects both in India and internationally.