The undersea cable unit of Reliance Communications Ltd filed a preliminary prospectus for an initial public offering in Singapore, the company said, in a deal that could raise about $1 billion, the news reports said.
Reliance Communications, controlled by billionaire Anil Ambani is looking to raise the funds to ease the debt load of $7 billion as of March. It has not been successful in several attempts to raise the money by selling assets.
The shares in Reliance Communications, the second largest Indian cellular carrier by subscribers and the fourth by revenue, closed 2.6% higher after the news.
According to the sources, Reliance Communications also plans to sell as much as 75% of its holding in the undersea cable unit. The unit will be listed as a business trust known as GTI trust. Reliance Communications also plans to begin road shows for the deal on Monday.
The company and its advisers will decide on the indicative price and yield ranges. The initial feedback from the investors suggested the unit will have to pay a yield of more than 10% to sell the IPO to the investors.
According to the preliminary prospectus filed, the business generated revenue of $267.5 million on a pro forma basis for the year ended March 2012.
Reliance Communications also expects the unit’s revenue to surge to $287.6 million in the fiscal year 2013 and $308.8 million in the fiscal 2014. The advisers for the public offering are Deutsche Bank, Standard Chartered, DBS, and Industrial and Commercial Bank of China.
Reliance Communications Ltd is an Indian broadband and telecommunications company based in Navi Mumbai in India. The company is the world’s 16th largest mobile phone operator with over 150 million subscribers and India’s 2nd largest telecom operator in India after Bharti Airtel.