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Tuesday, January 24, 2006

RIL to issue fresh IPO to fund mega expansion

Just after the seperation of Reliance group companies on the bourses, the Mukesh Ambani group has announced the re-birth of Reliance Petroleum. This will be an entirely new company and will come out with a mega initial public offer, the first from the Ambanis in 13 years.

The state of the art Reliance refinery at Jamnagar in Gujarat will soon be doubling its capacity from around 3 million tonnes currently to 6 million tonnes, once the expansion is completed. For this, investments to the tune of USD6 billion have been outlined.

So, how will Reliance raise so much money? RIL has created a new subsidiary with an old, familiar name-Reliance Petroleum Limited, that will raise the amount through a mix of an IPO and debts. In what could be one of the largest IPOs, Reliance plans to raise around USD1.1 billion to USD1.3 billion through the capital market while it plans to take debts to the tune of USD3.5 billion.

Reliance Petroleum will also be in charge of implementing both the refinery and polypropelene projects. Interestingly, this will be a rebirth for Reliance Petroleum Limited, that was merged into Reliance Industries in 2002.

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