MUMBAI: Anil Ambani’s Reliance Communications (RCOM) is in talks to raise up to $5-6 billion from banks to part-finance its planned acquisition of the South African telco MTN. RCOM may pledge the shares of MTN to raise the funds and also provide some sort of guarantee to the lenders.

Sources in the know said Deustsche Bank, HSBC and Barclays, among others, are putting in place short-term financing for RCOM to finance the deal. A few Indian banks and a host of European banks have also offered an underlying commitment to lend money for the transaction. RCOM will have to repay this debt in a year or so by raising long-term funding.

RCOM’s 45-day exclusivity period (during which MTN could not consider any alternative partner) ends on July 7. It’s unlikely that the transaction would be completed by then, said a source in the know. Instead, the exclusivity period might be extended.

The entire transaction is expected to be routed through a special purpose vehicle (SPV). In addition to RCOM, other partners could also pick up equity in this SPV. RCOM is learnt to have been in talks with a Middle East-based sovereign wealth fund and a couple of private equity players to offer stake in the SPV.

It is learnt that the private equity funds are not-so-keen to participate in the SPV, while the sovereign fund is interested in it. RCOM will likely hold a majority equity stake in the SPV.