Anil Ambani mulls public issue, commercial bank for group firms (Roundup)

MUMBAI - A public issue, entry in commercial banking and sale of strategic stake to an investor were among a slew of proposals unveiled by the Reliance Anil Dhirubhai Group for three companies during their respective shareholder meetings here Tuesday.

Group Chairman Anil Ambani, who presided over the back-to-back meetings from 10 a.m. to 3 p.m., also set an ambitious target of 25,000 MW of energy capacity by 2015 and announced a new initiative on infrastructure lending with a target of $11 billion as asset base.

“The Reliance Anil Dhirubhai Ambani Group is by far the youngest of all large business houses in India, yet we already rank among the top 5 on every important financial and operating parameter,” Ambani told the shareholders.

“In a short span of just four years, our group market capitalization has risen to over Rs.125,000 crore ($27.5 billion), ranking us amongst the top four business houses in India,” he told the shareholders of the three companies.

The companies were Reliance Power, Reliance capital and Reliance Communications and Amabni’s near-to-medium-term plans outlined for them saw their scrips end higher on the Bombay Stock Exchange.

For Reliance Power, the Group chairman said the target was to raise the capacity manifold over the next 24 months to touch 5,000 MW, with an overall target of 25,000 MW by 2015, against the present capacity of 600 MW.

This company, he said, had concluded India’s largest fundraising exercise worth $11.1 billion to finance 10,000 MW worth of projects, helping financial closure for two ultra-mega power projects of 4,000 MW each-at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh.

He also announced an outlay of over $2 billion for the 2,400 MW power project at Samalkot in Andhra Pradesh. The construction for this unit, which had already started, will be completed by 2012, the shareholders were told.

For Reliance Communications, India’s second largest telecom firm, he said there was a proposal not just to induct a strategic investor with up to 26 percent stake, but also a public issue for its now independent towers arm.

“There is substantial interest in the market for such an offering given that we are now the only telecom operator in the country without a foreign partner,” he said, adding the idea was to become a debt-free company in three years.

On Reliance Infratel, the infrastructure arm now hived off into a separate entity, Ambani said discussions were on with strategic investors to unlock value and create a truly independent, operator-neutral tower company.

“We also have the possibility, if considered appropriate, of combining such a transaction with a possible initial public offering. For this we have necessary approval already from the Securities and Exchange Board of India,” he added.

Ambani said five years ago Reliance Communications had less than 10 million customers. But today, it had expanded to over 115 million, making it India’s second largest and among the world’s top four single-country operator.

“Reliance Communications will now lead the next wave of change-India’s second telecom revolution,” he said, adding third generation (3G) telephony and high-speed data access were high on priority.

“My vision is to make India a ‘wire-free’ country where every Indian has access to high-speed data at the click of a mouse, the press of a key.”

At the earlier meeting, the Group chairman said Reliance Capital was committed to playing role in India’s infrastructure space and the nation-building endeavour, since over $1 trillion was to be spent in this area over the next few years.

“Reliance Capital will leverage this unmatched domain expertise of our group to offer customized financing solutions to vendors, suppliers and contractors, with targeted returns on equity of 18-20 percent,” he said.

“Our target is to create, in a phased manner, an asset base of over Rs.50,000 crore in the next three-five years.”

He said Reliance Capital was the first Indian insurance company to announce its plans for listing in 2009 and that the group awaited the guidelines in this regard from the industry regulator.

“Once this is done, we will explore the possibility of creating value for our investors by listing our life insurance business,” he said, adding entry into commercial banking space for which rules had just been framed was also top on the agenda.

“We have always regarded banking as a high priority and a huge potential opportunity, and are evaluating the different options contained in the guidelines.”