Reliance Industries rights issue: Biggest ever in India, first in 29 yrs; check share discount, offer size

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Updated: Apr 30, 2020 8:08 PM

India’s most valuable company, Reliance Industries Ltd on Thursday approved a Rs 53,125 crore fundraising plan through a rights issue of equity shares. RIL said it will issue shares at a price of Rs 1,257 per fully paid-up equity share.

Reliance Industries Ltd, SEZ refinery, RIL, Jamnagar in Gujarat, coronavirus outbreak, RIL SEZ refinery,Vadinar refinery, gujaratThe move will presumably help RIL cut debt on its books, as it aims to become a zero-net-debt company by March 2021.

India’s most valuable company, Reliance Industries Ltd on Thursday approved a mega Rs 53,125 crore fundraising plan through a rights issue of equity shares to the existing shareholders. RIL — the oil-to-telecom conglomerate led by Mukesh Ambani — said it will issue shares at Rs 1,257 each, a 14% discount to today’s closing price. The rights issue will be in the ratio of 1:15, meaning one equity share issued for every 15 shares held. Further, the company also said that the promoters will subscribe to the full portion of their quota, and also to the unsubscribed portion of the public offer. This would ensure that RIL will end up getting the full money of the rights issue size. The rights issue, which will be the biggest ever to enter the Indian market, will be the first time in 29 years that RIL will raise funds from the public.

The move will presumably help RIL cut debt on its books, as it aims to become a zero-net-debt company by March 2021. RIL’s net debt at the end of December 2019 stood at Rs 1.53 lakh crore while the cash in hand stood at Rs 1.3 lakh crore. Mukesh Ambani in August Last year had announced his intentions to make RIL a zero-net-debt company.

Earlier this week, RIL in a filing to the stock exchanges said that the company’s board will consider a rights issue. The size of the issue, however, was not known till today. “The move to raise capital during this time reflects the unflinching faith of promoters in the medium to long term prospects of various businesses,” Ajay Bodke, CEO – PMS Prabhudas Lilladher said earlier this week. Market veterans are seeing the capital raising by RIL as positive in times when there is pessimism across the markets.

The need for RIL to raise capital could be aided by the hurdles that the company is forecasting ahead in domestic markets and the possible fallout of the Saudi Aramco deal, Deepak Jasani, Head Retail Research, HDFC Securities told Financial Express Online on Tuesday. In another attempt to reduce its debt and make a bigger footprint in the retail segment, RIL added Facebook to its friend’s list selling a 10% stake in the telecommunications arm, Reliance Jio. The deal worth Rs 43,574 crore will see Facebook and Jio tap into the customer base of local mom & pop stores. RIL shares have staged a smart recovery on the bourses after hitting a low of Rs 883 on March 23, to jump 66% since then to now trade at Rs 1,467 per share.

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