Reliance Power Set to Raise $500M via FCCBs in Major Deal with Värde Investment Partners – New Employee Stock Option Scheme Unveiled

Reliance Power’s board has given the green light to raise $500 million (approximately ₹4,200 crore) by issuing Foreign Currency Convertible Bonds (FCCBs). This decision was revealed in a regulatory filing on Thursday.

FCCBs Issued to Global Investment Firm

The FCCBs will be issued to affiliates of Värde Investment Partners, LP, a major global alternative investment firm. These bonds are set to have an ultra-low interest rate of 5% per annum. The bonds will be unsecured and will have a long tenure of 10 years. The issuance of the FCCBs will be done on a private placement basis.

The filing stated:
“Issue of up to $500 million ultra-low cost interest of 5% per annum, unsecured, 10-year long tenure Foreign Currency Convertible Bonds (FCCBs), on a private placement basis to affiliates of Värde Investment Partners, LP.”

Second Fundraising in a Month

This marks the second fundraising effort by Reliance Power in a short period. On September 23, the company’s board approved raising ₹1,525 crore through preferential allotment. The proceeds from this earlier preferential issue are aimed at expanding the company’s business operations. These expansions could take place directly or through investments in subsidiaries and joint ventures. Additionally, the funds will be used for debt reduction and other general corporate purposes.

New Employee Stock Option Scheme (ESOS) Announced

Alongside the FCCB issuance, Reliance Power has also introduced an Employee Stock Option Scheme (ESOS). The scheme will be managed by the company’s nomination and remuneration committee, designated as the compensation committee (NRC). According to the regulatory filing, the stock options will be granted to eligible employees under the ESOS.

However, the implementation of this scheme will require the necessary approvals, including permission from shareholders.
“The ESOS shall be subject to requisite permission, sanction, and approval including approval by the shareholders of the company,” the filing added.

Stock Performance and Market Reaction

Reliance Power’s stock performed well following the announcement. On Thursday, the company’s share price rose by 4.99%, closing at ₹53.65 on the Bombay Stock Exchange (BSE). The announcement regarding the FCCBs came after the market hours.

This move reflects the company’s ongoing efforts to strengthen its financial position, improve operational efficiency, and provide more incentives to its employees.