RIL TO RAISE $2.5 BN TO FUND TELECOM LOANS
Reliance Industries is set to launch a $2.5-billion fundraising exercise overseas to refinance loans taken for its telco venture, Jio. This would be the largest fundraising exercise by any Indian firm this year in the overseas market, where liquidity among banks is high.
Iexercisewould for ndia’s Reliancelaunchbe its overseasthe largest telecoma Industries$2.5 largestto privatebillion refinanceventure, fundraising(RIL), sector fundraisingloansJio.is set firm, exercise This takento in amongthe by overseasbanksany Indianis market,high. company where this liquidity year
tranches,While RIL $815 would million raisein US the dollarsloan in and two ^150 million; its telecom arm, Jio would raise $1.5 billion, which would be guaranteed by the parent company.
On Wednesday, RIL shares closed five per cent up at ~914 a share, providing the stock a total market value of ~5,78,637 crore. The loan is arranged by ANZ, Barclays Bank, BofA ML, Bank of Nova Scotia, BNP Paribas and Citibank among others, with margins of Libor-plus 56 basis points for the dollar-denominated loan.
Reliance Jio has created India’s biggest telecom network in the last few years with a staggering investment of over ~2,50,000 crore in the project. Since its launch a year ago, the mobile services have garnered 130 million customers based on free voice and cheap data. Since Jio’s launch, the telecom industry is witnessing consolidation with Vodafone and Idea Cellular agreeing to merge their operations and Bharti Airtel picking up smaller, weaker rivals for free.
The refinancing will help RIL to cut costs and has been a regular exercise over the years. RIL is one of India’s biggest fundraisers from overseas sources thus bringing down its cost of funds to a large extent, a banker said.
Though fundraising from the overseas market is lower since January as compared to the same period last year, bankers said apart from RIL, metal-to-oil major Vedanta has also raised funds from the international markets. Pharma major Intas is looking to raise $1 billion to fund the acquisition of Teva’s assets in the UK and Ireland while Mu Sigma raised $394 million last month from the overseas market. “It to makesfund their sense acquisitionsfor Indian or companies equipment purchases abroad by raising loans abroad as the rates are cheaper. If the company has good export income then it comes in handy as a natural hedge against any fluctuations in the foreign exchange rates,” said a banker asking not to be named. RIL also is undertaking a Diwali clean-up exercise by selling its negative-return shale gas business in the US. The company had invested $9 billion in the American shale gas industry but returns were negative till date. And hence RIL has decided to exit the business as long as the offer is attractive. The company has also made it clear that it is not a distress-seller of any of its US assets.