Reliance Industries’ Rs53,125-cr rights issue likely to open on 22 May
10 May 2020
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Reliance Industries Limited (RIL) is likely to launch its Rs53,125-crore rights issue, the first in the past 30 years, on 22 May. The rights issue, priced at Rs1,257 per share, will be offered to existing shareholders in the ratio of 1:15.
The company has set the record date as 14 May, giving investors time until Thursday to buy RIL shares and allowing them to subscribe to the rights issue of shares at a discount of 20 per cent to its closing price on 8 May.
As per the payment terms, 25 per cent of the amount will be on application and the balance on more calls.
Market sources said there is a strong repositioning of RIL as consumer/technology company with Jio and retail platforms.
As new strategic investors participate in growth engines, the rights issue will reward existing shareholders by enabling them to participate in consumer/technology business value creation.
The price of "Right" shares to maintain the earnings per share (EPS) is Rs 1,077. At 8 per cent discount on the market price of Rs 1,427, the rights issue will be at Rs 1,314 with a total size of Rs55,533 crore.
If the discount is 10 per cent, the price will be Rs1,284 at a total size of Rs54,265 crore. If the discount is 12 per cent, the rights issue price will be Rs1,257 with a total issue size of Rs53,124 crore.
The rights issue will ensure all investors get to participate at the same level as promoters in upcoming opportunities. The promoters will take up their entitlement and all of the unsubscribed portion.
RIL stock, which had fallen by around 12 per cent from its 52-week high, has steadily gained despite the lockdown and oil price fall. On 24 March when the lockdown was announced, RIL stock was pegged at Rs943. And on 20 April, when oil prices crashed, the stock was at Rs1,243.8.
On 22 April, when the Facebook-Jio deal was announced, the stock was at Rs1,237.4 but climbed to Rs1,429.8 by 27 April, the day of the announcement of board meeting for rights issue.
Market sources said that the rights issue will be accretive for RIL shareholders from FY21 with a potential for significant returns.
In its bid to go debt free by the end of March 2021, RIL has entered into partnerships with Facebook, Silver Lake and Vista Equity to raise Rs60,597 crore.
With the rights issue, RIL will have raised a total of Rs1,13,722 crore.
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