Reliance Jio raises $214m via private placement of NCDs

Reliance Jio. Photo: Livemint

As many as 22 mutual funds took part in Reliance Jio Infocomm Ltd’s (RJio) latest fundraise of ₹1,500 crore ($214 million) through private placement of non-convertible debentures (NCDs), reported Mint, citing two people with knowledge of the development.

“Reliance Jio has raised ₹1,500 crore which would be used to expand its operations in the GigaFiber segment,” one of the two people cited above said. The NCDs bear a coupon rate of 8.70 per cent per annum and would be redeemable in July 2021, the person said.

Reliance Jio did not respond to an email query for comment until press time.

Reliance Jio’s parent Reliance Industries Ltd (RIL) has approval from its shareholders to raise as much as ₹20,000 crore ($2.85 billion) through NCDs.

“RIL is a AAA-rated issuer and has a higher volume of issues. Also, most of these are short-term instruments which we are holding on to maturity. Consideration for us is the yields,” said a fund manager whose fund participated in the private placement. He spoke on the condition of anonymity.

SBI Short Term Debt Fund, DSP Blackrock Short Term Fund, HDFC Short Term Debt Fund, IDFC Bond Fund, Axis Mutual Fund and ICIC Prudential Corporate Bond Fund are among funds which took part in the latest fundraise.

RIL, during its first-quarter earnings statement for this fiscal, said it has retained its domestic credit ratings of “Crisil AAA/Stable” from credit rating agency Crisil; “IND AAA/Stable” from credit rating agency India Ratings and an investment grade rating for its international debt from Moody’s as Baa2 and BBB+ from Standard & Poors.

Jio will use the funds for expansion in the telecom sector.

Jio plans to extend fibre connectivity to homes, local merchants, traders and small businesses. While for homes, this could mean ultra HD entertainment, multi-party video conferencing, digital shopping, security cameras, home appliances and voice-activated virtual assistants, for retail it would mean signing on to local merchants and boosting their sales through online-to-offline marketplace.

JioGigaFiber will be the largest greenfield fixed-line broadband roll-out globally, with a simultaneous launch in 1,100 cities across India, Mukesh Ambani had said, and may come bundled with content, set-top box and VoIP (voice over internet protocol) phone and could potentially disrupt the wired broadband market in the same way as it disrupted the wireless market.

RIL’s outstanding debt till June is ₹2.42 trillion. Till March 2017, the company’s debt was at ₹1.19 trillion.

Jio spent ₹17,000 crore ($2.4 billion) on capex in the June quarter, higher than the ₹14,000 crore ($1.99 billion) in the March quarter. This June, Jio raised ₹2,000 crore ($285.4 million) from State Bank of India Security Service through private placement of secured redeemable NCDs.

“Cash burn at the company remains exceptionally high and RIL will keep raising funds to meet its investment commitments,” said the first person cited above. “It has RCom’s assets to pay for. It had also bid for Alok Industries.”

RIL will pay ₹5,000 crore ($713.4 million) for textile-maker Alok Industries, which it won along with in JM Financial ARC, under the bankruptcy bidding. It will also pay about ₹17,300 crore ($2.5 billion) to purchase spectrum, mobile-phone towers and fibre assets from Anil Ambani-promoted RCom.

This article was first published on livemint.com.