Financial Daily from THE HINDU group of publications
Tuesday, Jan 24, 2006
Corporate - New Projects
Markets - IPOs
Marketing - Retailing
Reliance plans Rs 6,000-cr IPO for refinery project To invest Rs 3,315 cr in retail biz
Mumbai , Jan. 23
AFTER nearly 12 years, Reliance Group has announced its plans for another mega IPO to raise Rs 5,000-6,000 crore for part funding its new refinery and petrochemicals project.
The Mukesh Ambani controlled Reliance Industries Ltd (RIL) has also announced an initial investment of $750 million (Rs 3,315 crore) in retail business.
The RIL board which met on Monday approved an equity issue by its newly created subsidiary, Reliance Petroleum Ltd (RPL), which will implement the new refinery and petrochemical projects at Jamnagar, Gujarat, at an estimated cost of $6 billion (Rs 27,000 crore).
The project at the special economic zone includes a 27-million tonne export-oriented refinery and a 1-million tonne per annum polypropylene plant. The project is planned to be funded by a debt of $3.5 billion (Rs 16,000 crore) and an equity of $2.5 billion (Rs 11,000 crore).
The IPO will be sometime during the first half of 2006-2007, the company said on Monday. Reliance Petroleum, the wholly owned subsidiary of RIL, will continue to be a subsidiary even after the public issue, the company said.
The last time the Reliance group had entered the capital market was in 1993 when the erstwhile Reliance Petroleum Ltd raised Rs 862 crore through a public issue of Triple Option Convertible Debentures.
"The proposed IPO by RIL brings out the unique strategy of creating value for the new shareholders while, at the same time, unlocking value for existing shareholders of RIL," RIL said in a news release. Another Reliance Petroleum Ltd is in the process of emerging after the earlier one was merged with RIL, an analyst said.
The market awaits another IPO from the Reliance Group - that of Reliance Infocomm, controlled by the Anil Ambani group.
On Monday, the RIL board approved investments in supermarkets or speciality stores in select cities through a subsidiary, the company informed the stock exchanges. There have been reports indicating the group's seriousness in entering the retail sector.
RIL recently bid for and won a 18.5-acre plot at Bandra Kurla Complex, a prime location in Mumbai for over Rs 1,100 crore.
The share price of RIL edged down by Rs 1.90 to Rs 701.45 on the BSE on Monday.
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