In a successful nine-day winning streak, shares of Reliance Power have surged 5% after the company announced plans to allot 46.20 crore equity shares worth Rs 1,524.60 crore through a preferential issue to its promoters and other entities. The issue price of Rs 33 is at a 14% discount, making the news even more exciting for investors. The company plans to use a large portion of the proceeds for expanding its renewable energy portfolio and other business opportunities, in addition to reducing their existing debt.
Reliance Power Soars: Record-Breaking Winning Streak on Preferential Share Issue
Reliance Power has witnessed an impressive nine-day winning streak, with its share price jumping by 5% following the announcement of a preferential issue of equity shares. This surge has pushed the stock to new highs, bolstered by positive developments and a bullish market outlook.
Background
Reliance Power is a leading Indian power generation company with a diversified portfolio of thermal, renewable, and hydroelectric plants. The company has been facing financial challenges in recent years, including high debt levels and stalled projects. However, recent developments suggest a turnaround in its fortunes.
Preferential Share Issue
On December 29, 2022, Reliance Power announced plans to raise Rs 1,524.60 crore ($187 million) through a preferential issue of 46.20 crore equity shares at Rs 33 per share. The issue price represented a 14% discount to the market price at the time, making it an attractive proposition for investors.
The proceeds from the issue will be primarily used for:
Market Reaction
The news of the preferential issue was met with enthusiasm by investors. The share price of Reliance Power surged 5% on the day of the announcement and has continued to rise since then. The positive market reaction reflects investors' confidence in the company's plans and its ability to navigate the challenges it has faced in the past.
Top 5 FAQs
1. What is the purpose of the preferential share issue? The issue will raise funds to expand Reliance Power's renewable energy portfolio, fund other business opportunities, and reduce debt.
2. How much money will Reliance Power raise through the issue? The company will raise Rs 1,524.60 crore through the preferential issue.
3. What is the issue price of the shares? The issue price is Rs 33 per share, representing a 14% discount to the market price.
4. Who will subscribe to the shares? The shares will be subscribed by promoters and other entities.
5. What is Reliance Power's current debt position? As of September 2022, the company's total debt stood at around Rs 18,000 crore. The preferential issue proceeds are expected to reduce this debt burden.
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