Mumbai: Reliance Industries (
) is planning to raise as much as $2 billion (Rs 14,370 crore) via overseas syndicated loans to fund routine capital expenditure in
. This would be among the largest fundraising efforts by an Indian company in fiscal 2020.
RIL is in talks with at least a dozen banks including Barclays, Citigroup, JP Morgan, Morgan Stanley and MUFG and plans to launch the formal process to raise funds by mid-February, multiple people with knowledge of the matter told ET. The money could be raised in one or two tranches.
“Initial talks have started. This fundraising is for the routine capital expenditure and would ideally be completed before fiscal-end,” said one of the persons.
RIL didn’t respond till press time Tuesday to an email seeking comment. Banks could not be contacted immediately.
“The company is holding individual meetings with each investment banker to assess the situation, with more banks likely to join the syndication process,” said another person.
The offshore loan is expected to be of five-year tenure. It would be priced after adding a spread, or markup, over the London InterBank Offered Rate (LIBOR).
De-leveraging balance sheet
Although the initial price guidance is not yet fixed, the spread is likely to be more than 150 basis points, said a third person involved in the exercise.
In June last year, the company raised $1.85 billion of long-term foreign loans also to fund capital expenditure.
The fresh fundraising comes at a time when India’s largest company by market capitalisation has started de-leveraging its balance sheet by announcing plans to sell stakes in key businesses. The company had announced that it is in talks with Saudi Aramco to sell a 20 per cent stake in its oil and petroleum business while Canadian asset manager Brookfield said it would invest $3.7 billion in its telecom tower business and another $2 billion in gas transportation.
Reliance had total debt of Rs 1.5 lakh crore as on March 31, 2019. Chairman Mukesh Ambani assured shareholders in August 2019 that the company would be a zero net-debt firm in 18 months.
Indian companies raised a record $30.25 billion via bonds and loans in 2019, tapping relatively cheap offshore credit, according to data compiled by Dealogic. Dollar bond issuances touched $20.88 billion in the past year. Companies also availed of foreign currency loans worth $8.36 billion during the year.
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