The largest rights issue in India of the largest company in the country (in terms of market capitalisation) is set to open on 20 May. RIL (Reliance Industries Limited) has informed its shareholders that it plans to raise up to Rs 53,036.13 crore from the rights issue of which Rs 39,755.08 crore would be used for paring debt as part of the company's deleveraging plan.
As part of its plan to become a zero net debt company, the oil-to-telecom conglomerate has also announced four deals in a month's time.
Its recently announced deals with General Atlantic, Vesta Equity Partners, Silver Lake, and Facebook, along with the closure of its previously informed Rs 7,000 crore stake sale to BP in the oil marketing joint venture will lead to a total cash infusion of over Rs 74,000 crore.
RIL plans to reduce its net debt which was Rs 1.61 lakh crore as on 31 March 2020 to become net debt-free by March 2021.
If you are looking to participate in the rights issue, here are some things you need to know:
- The subscription for rights issue will open on 20 May and closes on 3 June 2020.
- RIL has already sent e-mails to shareholders eligible for the rights issue which includes the abridged letter of offer, application form of a rights issue and rights entitlement letter.
- 42,26,26,894 equity shares of the face value of Rs 10 each will be issued at a price of Rs 1,257 per rights equity share. This means it is being issued at a premium of Rs 1,247 per share.
- The Rs 1,257 per share price is a 14 percent discount to the closing price of the stock as on 30 April, the date on which the rights issue was announced.
- One share will be offered to eligible shareholders for every 15 shares held in the company as on 14 May.
- Shareholders participating in the issue need to only pay 25 percent of the total amount at the time of subscription: Rs 314.25 per rights equity share (face value Rs 2.50 + premium Rs 311.75). The balance amount of Rs 942.75 per rights equity share is to be paid later that is: Rs 314.25 per share or 25 percent in May 2021 and Rs 628.50 or the balance 50 percent in November 2021.
- Promoter and promoter group (which includes the Ambani family members) with 50.07 percent stake have pledged to buy the full extent of their entitlement and also subscribe to unsubscribed shares in the rights issue.
- Billionaire Mukesh Ambani's firm had on 30 April announced fundraising by way of a 1:15 rights issue as India's biggest and first such issue by the firm in nearly three decades. The rights issue is being seen as an attempt to reward the shareholders, cut debt at the group and promoters faith in the Reliance growth story.
- The last time RIL tapped the public for funds was in 1991 when it had issued convertible debentures. The debentures were subsequently converted into equity shares at Rs 55 apiece.