Reliance Infrastructure Ltd. (Rel-Infra), one of India's largest private sector utilities, said on Sunday that it would raise Rs4,300 crore ($909 million), through the issue of preferential shares to its promoters and long-term investors to augment the company's capital base in order to take up bigger infrastructure projects.

Additional capital injection would strengthen the net worth of the company by one-third to Rs16,000 crore, and augment its borrowing capacity from Rs24,000 to Rs32,000 crore, at a debt to equity ratio of 2:1.

The preferential offer is subject to approval from the company's shareholders.

Rel-Infra, a company promoted by the Reliance-Anil Dhirubhai Ambani Group (R-ADAG) is involved in power generation, transmission, distribution and trading as well as construction of power plants, roads, MRTS, sea-links, airports and SEZs.

The company announced that it would sell 42.9 million convertible warrants to the promoters, which will be converted into equity shares at Rs1,000 a share, raising the promoters stake in the company from the current 38 per cent to 48 per cent.

Rel-Infra chairman Anil Ambani said, ''We have a great sense of excitement at the unprecedented opportunities unfolding before Reliance Infrastructure, in high growth areas of power and infrastructure development.''

''The new equity capital infusion reflects our strong confidence in future growth prospects of the company,'' he added.

The company said in a statement that investment opportunities are extended to the long-term partners including Life Insurance Corporation of India (LIC), which holds around 13 per cent stake in the company as well as other insurance companies which hold a combined 7 per cent stake, under the same terms and conditions.

While approving the issue, the Rel-Infra board cancelled the warrants they had issued in last January at a higher conversion price of Rs1,822 per share, when the markets were running high. The warrants held a deadline of July 19, 2009 and would have required infusion of Rs7,835 crore, if converted.

The 10 per cent upfront payment applicable at that time, amounting Rs783 crore had gone into the company's reserves. Including the upfront payment, the offer price of the preferential shares works out to Rs1,183 a share, representing a premium of 26 per cent over the average price for the past two weeks and 83 per cent above the average three-month price.

The Securities and Exchange Board of India (SEBI) was wary of the cancellation of preferential warrants by several companies due to the slump in stock prices, and as a measure to counter it, increased the earnest money to be paid upfront from 10 per cent to 25 per cent of the warrant size.
As per the revised regulations, the promoters and long-term partners have to pay around Rs1,075 crore upfront and the balance upon conversion of the warrants.

Rel-Infra said that its order book position is close to Rs37,000 crore and  currently the company is executing 11 infrastructure projects worth Rs12,800 crore.

The company said it wants to gear up for the huge tenders which are expected to come up including JNPT container terminal IV (Rs7,000 crore), Mumbai Metro (Rs11,000 crore), power distribution in 6 cities (Rs12,000 crore) and many road projects.

Further to the company's recent decision to spin-off its businesses into seven wholly-owned subsidiaries, a shareholders meeting is scheduled to be held on 9 June.

Shares of Rel-Infra ended at Rs1,120.70, up 2.34 per cent at BSE on Friday.