Reliance Industries set to increase asset-backed securities deal to Rs 21,000 crore: Report

Reliance Industries has increased the size of its planned asset-backed securities (ABS) issuance to about Rs 21,000 crore from an earlier target of Rs 18,000 crore, as per a report by ET Now. The move is on the back of strong investor demand

As per ET Now report, the securities carry a coupon of around 7.75 per cent, with Barclays acting as the sole arranger for the transaction. The potential list of investors who are set to participate include the likes of mutual funds such as ICICI Prudential Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, and other domestic asset managers.

Deal backed by Reliance business receivables

The deal, which is set to close on Friday, will be backed by receivables from Reliance’s operating businesses. With a tenor of about four years, the notes are likely to appeal to mutual funds seeking shorter-duration investments. The financing will be structured as asset-backed securitisation, with securities issued by a trust and supported by a pool of loans linked to Reliance’s businesses.

“The entire stock is expected to be absorbed by five to six large investors, led by ICICI Prudential Mutual Fund with a commitment of about Rs 6,000 crore, alongside SBI Mutual Fund, HDFC Mutual Fund and others,” ET Now reports citing sources. “Barclays is also expected to take up a share of it.”

Reliance explores offshore funding options

According to ET Now report, the company is also exploring other fundraising options, including offshore loans such as a yen-denominated facility, as part of efforts to diversify its funding sources. The securitisation route allows Reliance to monetise its cash flows efficiently.

“After a period of negative flows, fixed-income inflows have picked up recently, particularly at the shorter end of the curve, reviving appetite and making yields such as 7.75 per cent for four years look attractive,” a mutual fund executive said.

Earlier this year, Reliance Industries had raised $2.9 billion through a dual-currency offshore loan, drawing participation from 55 banks, marking the biggest syndicate for an Asian loan this year.