The mega Rs 53,125 crore rights issue of billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) was completely subscribed on Monday, two days ahead of its closing on June 3. The rights issue, which opened on May 20, was subscribed 1.1 times as it received subscription for 45.47 crore equity shares against 42.26 crore shares on offer, as per the exchange data.
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. RIL rights issue received overwhelming response from investors and strong subscription, despite weak market environment in wake of coronavirus pandemic, depicting the high level of confidence shareholders have in the company's future.
Reliance Industries Rights Entitlement (RE) closed at Rs 223 per share on May 29, up 41 per cent against its May 20 listing price of Rs 158 and about 47 per cent from its closing price before the listing. RIL RE share price is calculated from the difference between the last closing price of Reliance Industries at Rs 1,408.9 per share and the company's rights issue price of Rs 1,257.
Meanwhile, shares of Reliance Industries closed at Rs 1,520.45, up 3.77 per cent against its previous close on the Bombay Stock Exchange, while the benchmark Sensex ended 2.71 per cent higher at 33,303.
RIL, which expects to raise Rs 53,036.13 crore from the rights issue, intends to use three-fourth of proceeds from its much-awaited 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 or 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.
Shareholders interested in subscribing to the issue will 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 is Rs 314.25 - face value of Rs 2.50 and a premium of Rs 311.75.
Meanwhile, Reliance Industries 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 December 31, 2019. The company 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.
By Chitranjan Kumar