The mega Rs 53,125 crore rights issue of billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) was subscribed 1.59 times on the final day of the offer, cumulating to an overall commitment of over Rs 84,000 crore. The RIL right issue - the largest such offering by a non-financial company in the world in the past 10 years - received overwhelming response from investors, including from lakhs of small investors and thousands of institutional investors, both Indian and foreign. The public portion of the rights issue was subscribed 1.22 times.
RIL has offered existing shareholders equity shares in the ratio of 1:15, that is, one new share for 15 held at a discounted price of Rs 1,257. Subscribers have to pay 25 per cent on application and the rest in one or more tranches. The total amount payable per rights equity share on application was Rs 314.25 - face value of Rs 2.50 and a premium of Rs 311.75.
The oil-to-telecom conglomerate said that the allotment of equity shares will happen on or about June 10, 2020. The rights shares are expected to be listed on the BSE and NSE on or around June 12 2020 under separate ISIN (International Securities Identification Number).
Commenting on the success of the rights issue, Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, said, "I express my sincere thanks to our dear and esteemed shareholders for participating in this Rights Issue and making it a new and proud landmark in the history of India's capital market."
"The success of RIL's rights issue, seen in the context of the prolonged nationwide lockdown necessitated by the COVID-19 pandemic, is also a vote of confidence, by both domestic investors, foreign investors and small retail shareholders, in the intrinsic strength of the Indian economy. I have no doubt that the Indian economy will bounce back to follow a high-growth trajectory in the time to come, and make India a leading Digital Nation in the World," Ambani added.
The company had launched a highly innovative campaign to create awareness about the rights issue, using broad-based and multiple means of communication. Reliance Industries Rights Entitlement (RE) was actively traded reflecting broad-based interest in the rights issue, it said.
RIL RE share price is calculated from the difference between the last closing price of Reliance Industries at Rs 1,542.45 per share and the company's rights issue price of Rs 1,257. RIL shares closed Wednesday's trade at Rs 1,542.45, up 0.41 per cent against its previous close on the Bombay Stock Exchange, while the benchmark Sensex ended 0.84 per cent higher at 34,109.
This is the first instance of RE's being traded in demat form on the stock exchanges since SEBI introduced this platform and it was a resounding success.
A unique feature of RIL's rights issue was that, despite its record-setting magnitude, it was completed entirely on a digital platform, defying the formidable constraints imposed by the COVID-induced lockdown.
RIL intends to use three-fourth of proceeds from the rights issue for repaying some of its borrowings, as per the offer document filed with exchanges. Of Rs 53,036.13 crore from the rights issue, Rs 39,755.08 crore would go towards repayment/ prepayment of all or a portion of certain borrowings availed by company. The remaining Rs 13,281.05 crore would be used for general corporate purposes.
Apart from the rights issue, RIL has raised a total of 78,562 crore by selling minority stakes in its digital arm to Facebook as well as private equity firms such as General Atlantic, Vista Equity, Silver Lake, and KKR. The country's most valued firm is likely to achieve its target of becoming a zero net debt company by March 2021 by repaying all its liabilities. RIL's net debt stood at Rs 1.53 lakh crore as of 31 December.