The initiative also aligns with the company's plans to start new businesses in areas such as electric power generation. Recently, Reliance Infrastructure has also approved plans to establish four new companies.
According to the disclosures made by Reliance Infrastructure to the stock exchange, the Anil Ambani's company has outlined significant expansion plans and it includes establishment of four new subsidiaries — Reliance Jai Pvt Ltd (RJPL), Reliance Unlimit Pvt Ltd (RUPL), Reliance EV Pvt Ltd (REVPL), and Reliance Risee Pvt Ltd (RRPL). These companies will focus on sectors like electric power generation, IT consultancy, infrastructure, and the manufacture of vehicles for fuel transport.
Additionally, there are plans to invest $7 billion over the next three years to expand its engineering and construction business in India and acquire assets overseas². This investment is separate from the funds allocated for their power generation projects and reflects the company's ambition to grow its global footprint and diversify its operations.
These expansion efforts are part of Reliance Infrastructure's broader strategy to manage its debt and strengthen its position in the infrastructure sector.
About Foreign Currency Convertible Bonds (FCCBs) for an uninitiated, these are a type of convertible bond issued in a currency different from the issuer's domestic currency. Essentially, they are a mix of debt and equity instruments. FCCBs are typically used by companies looking to expand internationally or to take advantage of lower interest rates in foreign markets. They are a strategic financial tool for companies like Reliance Infrastructure to manage debt and fund expansion plans while providing an investment opportunity with the potential for equity conversion.
FCCBs offer the bondholder the option to convert the bond into a predetermined number of the issuer's equity shares. The principal and interest payments are made in a foreign currency, not the issuer's local currency. They act like a bond by making regular coupon (interest) payments, but also provide the potential for conversion into stock, which can be beneficial if the company's share price appreciates.
The convertibility feature can make FCCBs more attractive to investors, as it adds the potential for capital appreciation. Companies may choose to issue FCCBs to raise capital in a foreign currency, often at a lower interest rate compared to local borrowing.
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