Mukesh to invest Rs 450 cr in RPL

Investment in personal capacity; pre-IPO placement may net Rs 2,700 cr.

Reliance Industries Chairman Mukesh Ambani will invest up to Rs 450 crore in his personal capacity in the pre-initial public offer private placement of Reliance Petroleum Ltd (RPL) shares.

Sources close to the developments said Ambani would pick up the shares at around Rs 60 a share "" the same price to be offered to other private equity investors and retail investors. The pre-IPO placement is expected to be concluded tomorrow.

Ambani's personal stake in RPL will be around 1.67 per cent after the IPO. "It sends a strong signal to retail investors about Mukesh Ambani's confidence in the project and his commitment," investment banking sources said.

This is apart from the decision of Reliance Industries to acquire 900 million equity shares "" exactly the same amount to be offered to the public "" at the issue price as promoters' contribution. After the issue, the equity share capital will be Rs 4,500 crore. The face value of the RPL share is Rs 10.

Nearly a dozen other private equity investors have also evinced interest in shelling out around Rs 2,700 crore to acquire up to 450 million shares of RPL at Rs 60 apiece. The combined shareholding of the investors, including Ambani's, will be 10 per cent of the post-initial public issue share capital of the company.

The names of private equity investors doing the rounds are: Blackstone, Deutsche Bank, Citigroup, UBS and some hedge funds. The demand had been so huge (twice the allotment) that RPL was thinking of revising the allotment figure beyond 10 per cent, investment banking sources said. Reliance Industries executives declined to comment on the issue.

RPL, a wholly owned subsidiary of Reliance Industries, is setting up a Rs 27,000-crore refinery at Jamnagar in Gujarat. The public offer will mobilise funds in a range of Rs 4,900-5,800 crore ($1.1-1.3 billion), depending on the issue price of the fully book-built issue.

RPL filed a red herring prospectus with the Securities and Exchange Board of India in the first week of this month. Sebi's clearance is expected next week.

RPL had recently concluded a syndicated loan of nearly Rs 6,750 crore. It intends to seek additional financing through an export credit of $1-1.5 billion (Rs 4.500-6750 crore).