Reliance Power surges for ninth straight session, here's why

Reliance Power shares: Shares of Anil Ambani-backed Reliance Power (RPower) were locked in 5 per cent upper circuit at Rs 40.06 on the Tuesday. The stock rose for ninth trading session and out of these nine sessions, Reliance Power shares were locked in fifth straight session, data from the stock exchange showed. Surge in Reliance Power shares on Tuesday came after the company's board approved fund raising to the tune of Rs 1,525 crore via preferential issue of shares.

The board of Reliance Power on Monday approved raising Rs 1,525 crore through a preferential issue where promoters will pour Rs 600 crore into the company to advance its business.

This comes days after Reliance Infrastructure, another Anil Ambani-led group firm, approved raising Rs 6,000 crore.

"The Board of Directors of Reliance Power Limited at its meeting held today has approved raising of Rs 1,524.60 crore by preferential issue of up to 46.20 crore equity shares and /or warrants convertible into equivalent number of equity shares of the company at a price of Rs 33 per share/warrant," the firm said in a statement.

Reliance Infrastructure, the promoter of the company, will enhance its equity stake by over Rs 600 crore. The other investors who will participate in the preferential issue are Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services.

"The preferential issue proceeds would be utilised for expansion of business operations directly and/or through investment in subsidiaries and joint ventures, debt reduction and for general corporate purposes," the statement said.

The preferential issue will enhance the company's networth from about Rs 11,155 crore to over Rs 12,680 crore. "The listed entity has zero bank debt," the statement said adding the enhanced capital will support the company's participation in the renewable energy sector.

Reliance Infra is raising Rs 6,000 crore -- Rs 3,014 crore through preferential allotment of shares and Rs 3,000 crore by issuing shares to institutional buyers.

(With PTI inputs)