Reliance, Jio Raise $5bn, The Largest Syndicated Loan In Indian Corporate History; Has Hindenburg Research Found Its Next Target?
In what is being called the largest syndicated loan in India's corporate history, Reliance Industries Ltd and Jio Infocomm have raised a total of $ 5 billion in foreign currency loans. While Reliance raised $ 3 billion from 55 banks, its telecom arm secured an additional credit of $ 2 billion from 18 banks. This is the largest amount that Reliance Industries has managed to raise, but will this new development also catch the eyes and become a source of fodder for Hindenburg Research, which had managed to cause a major uproar and a severe dent to Adani Group and Gautam Adani. Here we will look into the many controversies of Reliance Industries and the similarities between the two conglomerates.
Reliance Industries Limited (RIL) is one of India’s largest conglomerates, and its Chairman, Mukesh Ambani, is one of the most prominent business figures in the country. Under Mukesh’s leadership, Reliance has grown into a diversified conglomerate with interests in petrochemicals, refining, oil and gas exploration, retail, telecommunications, and more.
And going by the latest reports, Reliance has managed to pull the biggest by far yet – Reliance Industries Ltd and its telecom arm Jio Infocomm have together raised a total of USD 5 billion in back-to-back foreign currency loans, thus becoming the largest syndicated loan in India’s corporate history.
Just a week before, Reliance raised USD 3 billion from 55 banks while Reliance Jio Infocomm secured additional credit of USD 2 billion from 18 banks, as per what has been reported so far.
While USD 3 billion has come in from 55 lenders, which interestingly include financing from nearly two dozen Taiwanese banks, the rest include global giants such as HSBC, Bank Of America, MUFG, SMBC, Citi, Mizuho and Credit Agricole.
The funds will be deployed towards meeting Reliance’s capital expenditures and Jio to fund its nationwide 5G network rollout.
Additionally, the USD 2 billion will be divided between Reliance and Jio and will most likely be secured by the end of April.
Details Of The Loan
Interestingly, sources close to the development maintain that the response toward the new loan of USD 2 billion was indeed tremendous, given the fact that the USD 3 billion loan had gained sufficient traction in the senior phase by mid-January when it was launched into general syndication.
The new loan of USD 2 billion has the same terms as the borrowing signed on March 31 with 55 lenders, including 40 that joined in two phases of syndication.
The main reason for this vast positive response is attributed to the fact that the oil-to-telecom conglomerate is one of the most sought-after credits from India and enjoys deep banking relationships.
As mentioned earlier, almost a third of the allocations, about USD 927 million, went to 19 Taiwanese banks that monopolized the final list of lenders. In comparison, 8 Japanese banks took a combined amount of USD 276.36 million.
The USD 3 billion borrowings are also split equally for Reliance and Jio, with the latter’s portion being its first non-recourse loan.
Last year, Jio obtained a USD 750 million five-year new-money club loan for capital expenditure.
Reliance Industries Ltd’s (RIL) last syndicated offshore borrowing was a USD 1.45 billion dual-currency financing completed in 2020, comprising a USD 1.1 billion 3.5-year piece and a 38.45 billion yen five-year portion.
The New Developments Have Enough To Capture the Attention Of Hindenburg Research?
While one of India’s largest conglomerates has managed to pull the best wild card, it is not far away from controversies either – but will this latest feat garner the unneeded attention of short-selling Hindenburg Research?
Let’s countdown to some of the controversies that Reliance Industries has courted through the years; here are a few of them –
Antitrust case: Reliance Industries has been accused of engaging in anti-competitive practices in various industries, including telecom, retail and petrochemicals.
Insider trading case: The Securities and Exchange Board of India (Sebi) has imposed an aggregate penalty of Rs 70 crore on Reliance Industries (RIL), its chairman Mukesh Ambani and two other entities for manipulative trading.
Controversial deals: Reliance Industries has been involved in several controversial deals over the years, including the acquisition of Network18, a media company, and the purchase of a stake in the Indian arm of Hamleys, a toy retailer. These deals have raised questions about the company’s business practices and its influence in various industries.
Data privacy concerns: Reliance Industries has been criticized for its handling of user data in its various businesses, including telecom and e-commerce.
Environmental concerns: Reliance Industries has faced criticism for its environmental practices, particularly in the petrochemicals sector. In 2019, a gas leak at a Reliance Industries plant in Gujarat led to the hospitalization of several people. The company has also been accused of violating environmental norms at its Jamnagar refinery.
It is important to note that Reliance Industries has denied many of these allegations and has defended its business practices.
Conclusion: Will the current feat of Reliance Industries and the past controversies be interesting and worth exploring by the Hindenburg Research?
