RCom raises $1 billion from investors, promoters

Anil Ambani led Reliance Communications (RCom) on Wednesday raised about Rs6,100 crore (about $1 billion) through sale of stake to qualified institutional investors and issue of shares to promoters in an overnight deal.

Reliance Communications (RCom), India's fourth-largest telecom operator, raised nearly $800 million (Rs4,800 crore) through qualified institutional placement and $200 million (Rs1,300 crore) from sale of shares to promoters.

The stake sale was approved by the company's board at about 6 pm on Tuesday evening after closure of market hours and the deal went live on the stock exchanges at around 9pm. The book was fully covered by 11pm with orders pouring in overnight from US funds, while funds in Singapore and Hong Kong placed orders on Wednesday morning from 5.30 am onwards, market sources said.

The funds raised through the institutional stake sale or Qualified Institutional Placement (QIP) were 60 per cent higher than the originally proposed Rs3,000 crore, with the company receiving total bids worth Rs12,000 crore.

There was also demand from funds in Singapore and Hong Kong. According to sources, the company, which closed the QIP issue, had decided to retain Rs4,800 crore. The sources declined to be identified before a formal announcement.

Edelweiss Financial Services and Axis Capital had been hired to manage the QIP by the company.

The QIP was priced at Rs142.13 a share while the stake sale to promoters was priced Rs150 a share.

Meanwhile, The Times of India reported that the entire proceeds would go to pay down high cost rupee debt and deleverage balance sheet and interest savings of Rs800 crore. This could be termed as the single biggest equity issue since Narendra Modi's pro-business government assuming office.

The third-largest mobile operator by customers had net debt of Rs40,000 crore or $6.7 billion as of 31 March 2014, over five times its operating profit, which made it the most-leveraged among listed Indian carriers.

RCom shares on BSE closed almost flat at Rs151 in a volatile Mumbai market today.