Anil Ambani-led Reliance Infrastructure Ltd on Thursday approved raising as much as Rs 2,000 crore ($306 million) through a private placement of shares to institutional investors.
The company will use the funds to be raised via the qualified institutional placement (QIP) to capitalise on business opportunities in the defence sector, reduce debt and for general corporate purposes, it said in a stock-exchange filing.
The planned fundraise is one of the larger QIP issues in the recent past and comes at a time when Indian stock markets are at an all-time high.
The company has sought shareholder approval for the resolution.
Reliance Infrastructure had total debt of Rs 14,444.28 crore as of March 2016, according to VCCEdge, the data research platform of VCCircle.
A QIP is a capital-raising tool through which listed companies can issue fresh equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into equity shares only to institutional investors.
Capital markets regulator Securities and Exchange Board of India introduced QIPs in May 2006 to help listed companies raise equity in domestic markets in a faster and efficient manner, with less paperwork as compared with an IPO.
QIPs, as means to raise fresh equity, had fallen out of favour last year as private sector capex cycle remained weak, resulting in low requirement of fresh money.
Listed Indian firms raised $668 million via QIPs and allied routes last year, the lowest in five years, VCCEdge data show. The best year for companies raising fresh equity through private placements was 2009 when about four dozen companies raised $7.55 billion, the data show.
Reliance Infrastructure’s announcement follows a draft proposal in December 2016 to raise as much as Rs 3,750 crore by floating an infrastructure investment trust (InvIT).
Reliance Infrastructure is among the six companies seeking to list an InvIT after SEBI released final guidelines for public issues of units of InvITs last year. IRB Infrastructure Developers Ltd, MEP Infrastructure Ltd, GMR Infrastructure Ltd, Sterlite Power Grid Ventures Ltd and IL&FS Transportation Networks Ltd are the other five companies.
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