RIL subsidiary looks to raise ₹13,900 crore through rights issue

Reliance Industrial Investments Holdings Ltd (RIIHL), the investment arm of India’s most valuable company, plans to raise ₹13,900 crore through a rights issue of non-cumulative optionally convertible preference shares.

The funds will be used for acquisitions and to meet the group’s other funding requirements, two people aware of the development said, requesting anonymity.

RIIHL serves as a vehicle to invest in various business ventures of Reliance Industries Ltd.

“The funding would be raised in one or more tranches through non-cumulative optionally convertible preference shares. The rate of dividend would be 6%," said the first official aware of the development. The tenure of the shares is 20 years, he added.

RIL did not respond to an email sent on Monday.

Over the past year, RIL and its units have been acquiring stakes in various ventures. According to RIL’s website, the company over the past year has either acquired or entered into partnerships with more than 30 entities to expand operations of Reliance Jio Infocomm Ltd and Reliance Retail Ltd.

“RIL’s acquisitive streak is reflective of its ambition to emerge as a consumer business giant. Given RIL’s leadership in oil and gas and petrochemical segment, it obviously needs an inorganic route to grow in retail and telecom and acquisition is the only way," an analyst tracking RIL said on condition of anonymity.

Most of these acquisitions are to strengthen operations of its consumer businesses--retail and telecom. Ambani is relying on RIL’s consumer businesses to double its sales in about seven years and aiming that it will bring in as much to the overall earnings of the company as its energy and petrochemical businesses do.

RIL’s debt outstanding as on 31 March was ₹2.88 trillion against ₹2.19 trillion a year earlier. The company’s cash and cash equivalents increased to ₹1.33 trillion at the end of 31 March from ₹78,063 crore a year earlier.

On the retail front, RIL is said to be in talks to buy a controlling stake in UK-based toy maker Hamleys, according to media reports.

Reliance Industries Limited (RIL)