Reliance may use stake sales to help fund expansion plan
Reliance may use stake sales to help fund expansion plan – Reliance Industries Ltd (RIL), which has raised quite ₹2.2 lakh crore through stake sales, is probably going to travel on a shopping spree because the Covid-19 pandemic has clouded the prospects of cash-strapped businesses, making them takeover targets, said three people conscious of the company’s plans.
To strengthen its digital commerce, 5G, and fiber-to-the-home businesses Reliance is actively searching to accumulate startups, also as mature companies, to make India’s largest digital ecosystem spanning telecom, retail and payments, the people said on condition of anonymity.
In June, RIL had said that it’s become zero net debt, after offloading stakes within the Jio Platforms unit in back-to-back transactions with strategic and financial investors.
“Reliance Industries can pay creditors when the payment is due. Currently, the corporate is getting to use the cash it raised over the past few months to take a position across businesses, instead of retire debt,” said one among the three people.
Reliance Industries’ gross debt stood at ₹3.36 lakh crore at the top of the past financial year.
Kotak Institutional Equities, during a September 9 report, said that Reliance Industries is probably going to form large investments to accumulate synergistic opportunities across businesses to deploy its large cash balance and incremental free income as Reliance Retail Ventures Ltd, sold a 1.75% stake for ₹7,500 crores to non-public equity firm Silver Lake Partners and more investors for similar stake sales in its retail business.
Stakes surged to a record high of ₹2,313.90, on Friday by 7% making it the primary Indian company to hit a market capitalization of $200 billion.
“Reliance Retail is probably going to use a neighborhood of the fundraise for Future group acquisition pay-out/debt repayment,” said Axis Capital during a September 9 note.
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