Reliance Adds Funds to Aid Drilling Effort

MUMBAI -- Reliance Industries Ltd. raised about 31.88 billion rupees ($662 million) via a share sale, as it seeks to generate funds to expand its oil-and-gas exploration globally.

A total of 15 million treasury shares, held via the Petroleum Trust, were sold at 2,125 rupees apiece, the nation's largest company by market value said in a statement to the Bombay Stock Exchange on Thursday.

Reliance, controlled by billionaire Mukesh Ambani, plans to begin drilling wells in Kurdistan, Oman and East Timor over the next six months as part of a strategy to spread risk across a number of exploration blocks globally, its executive director, P.M.S. Prasad, had said Sunday.

The move comes as Reliance is embroiled in a three-year legal dispute with Reliance Natural Resources Ltd., run by Mukesh's younger brother, Anil Ambani, over the price of natural gas from a block off India's east coast.

Reliance Industries also is looking at partly selling stakes in some of its blocks in Kurdistan, Oman and Colombia, Mr. Prasad had said.

"This [share sale] is an effort by the company to monetize a part of the 198 million shares that are held by them as treasury stock," said M. Saeed Jaffery, a research analyst at Mumbai brokerage Ambit Capital.

Shares of Reliance slid on news of the share sale, closing down 4.4% at 2,086.35 rupees against the benchmark Sensex's 0.2% gain.

The shares have underperformed the Sensex by about 8.6% over the past three months.

"I think the markets are perhaps circumspect that treasury holdings are being diluted at these levels," said Deven Choksey, managing director at K.R. Choksey Securities, a Mumbai brokerage.

The sale price was a 2.7% discount to Wednesday's close.

DSP Merrill Lynch Ltd. and Citigroup Global Markets India Pvt. Ltd. acted as joint arrangers for the sale, the company said.