Reliance Industries Ltd. (RIL) may raise up to $1.5 billion through foreign loans, The Economic Times reported, citing people familiar with the development. Along with these funds, its telecom arm Reliance Jio is also in talks with lenders to raise up to $2.5 billion through foreign loans.
RIL plans to raise funds through external commercial debt (ECB). The same is planned to support its capital expenditure plan, which means the Ambani-led company is in talks with several groups of lenders, the report said.
The report said that Barclays, HSBC, MUFG Bank, Bank of America and Citigroup were among the lenders with which RIL was linked. Although the loans mentioned in the report may be issued for a period of five years, they are expected to be priced at 130-150 basis points above the Expected Overnight Funding Rate (SOFR).
As far as this financing through foreign loans is concerned, RIL may not require advance regulation as the Reserve Bank of India (RBI) recently eased ECB regulatory norms up to $1.5 billion.
While the report said that neither RIL nor other banks would comment on the matter, it deepened Reliance Jio’s stake in the equation.
According to the report, Reliance Jio is also in talks with organizations such as Bank of America, BNP, HSBC and Societe General (SoCGen) to arrange an offshore syndicated loan. The loan also appears to help finance purchases of 5G networks from Ericsson and Nokia, people familiar with the matter said.
Unlike the previously mentioned loans, this foreign loan may be valued after adding approximately 65 basis points to the SOFR. In the future, if more banks join, Reliance Jio may also increase the loan amount, according to the report.
This could be the end of the process as Reliance Jio is also looking to buy 5G network for $2.5 billion. While the company recently launched its 5G beta services in Delhi, Mumbai, Kolkata and Varanasi, it plans to expand its network across the country soon.