Dependency led by Mukesh Ambani expected to raise up to $1.5bn, Jio $2.5bn through foreign loans: report

Reliance Industries Ltd. (RIL) is likely to raise up to $1.5 billion via foreign loans, The Economic Times reported citing people familiar with the development. Along with the funds, its telecommunications arm Reliance Jio is also reportedly in talks with lenders to raise up to $2.5 billion through foreign loans.

RIL plans to raise funds through External Commercial Borrowing (ECB). The same was reportedly planned to support its capital expenditure plan and as a result, the Ambani-led company is in talks with several lender groups, according to the report.

The report mentioned that Barclays, HSBC, MUFG Bank, Bank of America and Citigroup were among the lenders RIL is in contact with. Although the loans mentioned are likely to be for five years, they are expected to be priced 130 to 150 basis points above the Secured Overnight Funding Rate (SOFR), according to the report.

With regard to this funding via foreign loans, it is also possible that RIL may not require prior regulatory approvals as the Reserve Bank of India (RBI) has recently relaxed the standards governing the ECB to 1.5 billion dollars.

Although the report mentions that neither RIL nor other banks have commented on the matter, it also clarified the role of Reliance Jio in this equation.

According to the report, Reliance Jio is also in talks with entities including Bank of America, BNP, HSBC and Societe Generale (SoCGen) to arrange an offshore syndicated loan. The loan is also likely to help finance purchases of 5G network equipment from Ericsson and Nokia, according to information shared by people familiar with the matter.

Unlike the previously mentioned loans, this offshore loan is likely to be priced after adding around 65 basis points to the SOFR. In case, in the future, if other banks join, Reliance Jio may also increase the loan, according to the report.

The finalization of this whole process could happen soon as Reliance Jio is also looking to purchase 5G network hardware worth $2.5 billion. While the company recently launched its 5G beta services in Delhi, Mumbai, Kolkata and Varanasi, it plans to expand its network nationwide very soon.