Mumbai, September 17: Reliance Industries Ltd raised about $660 million by selling 15 million shares at a discount to its Wednesday close, knocking shares of India’s largest listed firm down 5 percent in a steady Mumbai market.
The move is seen by analysts as a bid to prepare a warchest for likely acquisitions overseas and improve the company’s balance sheet.
“In our opinion, overseas exploration and production assets could be likely targets,” said Harshad Katkar, an analyst at brokerage UBS.
“The company has a cash of $4.6 billion and gross debt of $10.8 billion. We believe that with such strong financials and cash raised from the proposed sale of treasury stock, the company would be looking aggressively at growth opportunities,” he added.
Reliance sold 15 million of treasury stock at an average share price of 2,125 rupees, a discount of 2.7 percent to Wednesday’s close of 2,183.50 rupees.
At 0700 GMT, Reliance shares were down 4.85 percent at 2077.70 rupees, having fallen as much as 5.2 percent, in a flat Mumbai market.
Indian brokerage Motilal Oswal said in a report that Reliance management had indicated the sale of the shares was intended to create a more comfortable cash position.
The energy and petrochemicals-focused conglomerate’s original planned sale of 10 million shares was increased by 5 million, or half the overallotment option in a deal handled by Citigroup and Bank of America Merrill Lynch.
Trading volume in the index heavyweight was 11.5 million shares at 0700 GMT on Thursday, more than 11 times its average daily volume over the past 30 days.
Reliance Industries, controlled by billionaire tycoon Mukesh Ambani, in April began pumping natural gas from the D6 block in the vast Krishna Godavari basin off the east coast of India.
Reliance Industries has a market value of about $70 billion and is the most widely held stock by fund managers in India.
($1=48 rupees)