Reliance Power falls 8% on stake sale to VFSI Holdings

Shares of Reliance Power, a part of the Reliance Anil Dhirubhai Ambani Group, plunged over 8% on Friday, in an otherwise positive broader market, after the debt-laden company announced to sell a 15% stake in the company to VFSI Holdings for ₹933 crore. The shares will be issued at ₹15.55 per share, a 27% discount from Thursday’s closing price, aggregating to ₹933 crore to VFSI Holdings Pte.

VFS Holdings is a global alternative investment firm specialising in credit and credit-related assets. Currently, it manages over $13 billion in assets with teams in North America, Europe, and Asia Pacific focused on corporate & traded credit, real estate, and financial services.

Reacting to the news, Reliance Power shares opened flat at ₹21.3 apiece but soon slipped 8.2% to hit a low of ₹19.55 on the Bombay Stock Exchange (BSE). The stock has been falling for the last four trading days and has dropped 14.16% during the period. The midcap stock, with a current market capitalisation of ₹6,715.25 crore, trades higher than 20-day, 50-day, 100-day, and 200-day moving averages, but lower than 5-day average. In the calendar year 2022, the stock has risen 46%, while it has rallied nearly 50% in last one month only amid optimism over fundraising plan. In the last one year, the stock has given a positive return of 50% to its shareholders.

Reliance Power in an exchange filing on Thursday said its board approved issuance of up to 60 crore equity shares and warrants convertible into equity shares through preferential allotment on a private placement basis to VFSI Holdings Pte, subject to requisite approval. The board has also approved the notice convening the Extraordinary General Meeting (EGM) for seeking authorisations of members for issuance of foreign currency convertible bonds.

“The board of directors at its meeting held today i.e. on Thursday, September 8, 2022, has approved, inter alia: a. issuance of upto 60 crore equity shares and/or warrants convertible into equity shares through preferential allotment on a private placement basis to VFSI Holdings Pte. Limited, a foreign investor (Investor), and in this regard, to enter into an investment agreement with the Investor,” Reliance Power said in a BSE filing.

Earlier this week, Reliance Power and its subsidiary entered into an indicative memorandum of understanding (MoU) with Varde Partners for availing debt of up to ₹1,200 crore ($150 million) for settlement and discharge and restructuring of certain financial debt availed by the company.

“The drawdown of the debt will be subject to finalisation and execution of binding documents and all requisite approvals including regulatory approvals as per applicable rules/ laws/ regulations,” Reliance Power said in filing on September 5.

In June last year, Anil Ambani-led firm, Reliance Infrastructure raised ₹550.56 crore by preferential allotment of up to 88.8 million shares and warrants convertible into shares of the company to promoter group and VFSI Holdings.