Reliance Infrastructure has received overwhelming shareholder support to raise Rs 6,000 crore through a combination of preferential issue of shares and a Qualified Institutional Placement (QIP). Over 98% of shareholders voted in favor of the resolutions, setting the stage for a significant capital injection. The first phase of the fundraising plan will see the issuance of 12.56 crore equity shares or convertible warrants priced at Rs 240 per share, with Rs 1,104 crore invested by the promoters through Risee Infinity Private Ltd. This strategic move will bolster Reliance Infrastructure's balance sheet, increasing its net worth and positioning the company for growth and expansion.

Shareholders Approve Rs 6,000 Crore Fundraising

1. Shareholders Overwhelmingly Support the Plan

Reliance Infrastructure’s shareholders have given their nod to the company’s plan to raise Rs 6,000 crore. According to a stock exchange filing, more than 98% of shareholders voted in favor of the resolution via a postal ballot. This significant show of confidence allows the company to proceed with its multi-phase capital-raising strategy.

Breakdown of Fundraising Plan: The company’s board had approved the proposal on September 19, with Rs 3,014 crore earmarked for preferential allotment and Rs 3,000 crore for QIP.

First Phase: Preferential Allotment to Key Investors

2. Initial Fundraising of Rs 3,014 Crore

The first phase of Reliance Infrastructure’s fundraising initiative will involve the preferential allotment of 12.56 crore equity shares or convertible warrants, priced at Rs 240 per share. This phase alone is expected to raise Rs 3,014 crore, with prominent investors including the company’s promoters and two key financial institutions.

Promoters’ Contribution: Risee Infinity Private Ltd, a company owned by Reliance Infrastructure’s promoters, will invest Rs 1,104 crore by subscribing to 4.60 crore shares.

Other Investors:

Fortune Financial & Equities Services will invest Rs 1,058 crore by acquiring 4.41 crore shares.
Florintree Innovations LLP, led by former Blackstone executive Mathew Cyriac, will invest Rs 852 crore for 3.55 crore shares.

Impact on Reliance Infrastructure’s Financial Health

3. Strengthening of Net Worth and Reduction of Debt

The preferential issue is expected to have a substantial positive impact on Reliance Infrastructure’s financials. The company’s net worth will rise from Rs 9,000 crore to Rs 12,000 crore, significantly improving its capital structure. Additionally, the company is poised to reach near-zero debt, a remarkable shift that will enhance its financial flexibility and investor confidence.

Net Worth Growth: From Rs 9,000 crore to Rs 12,000 crore.
Debt Reduction: Targeting near-zero debt levels post the preferential issue.

Utilization of Funds: Expansion and Strategic Investments

4. Allocation of Funds for Growth and Expansion

Reliance Infrastructure has earmarked the proceeds from the preferential issue for key strategic purposes. These include the expansion of business operations, either directly or through investments in subsidiaries and joint ventures. The funds will also be used to meet long-term working capital requirements and for general corporate purposes, providing the company with the necessary capital to scale its operations and seize new business opportunities.

Conclusion: A Strategic Move for Growth and Stability

Reliance Infrastructure’s successful approval for its Rs 6,000 crore fundraising plan reflects strong shareholder support and positions the company for future growth. By securing major investments from promoters and institutional players, the company is poised to strengthen its financial foundation, reduce debt, and expand its operations. This strategic move marks a turning point for Reliance Infrastructure, setting the stage for sustained long-term growth and enhanced financial stability.

With its net worth poised to increase significantly and its debt nearing zero, Reliance Infrastructure is well-positioned to capitalize on new opportunities in the infrastructure and energy sectors.