The rights issue worth ₹53,125 crore was open for subscription from 20 May with a simultaneous rights entitlement platform, wherein for the first time ever, shareholders could freely trade their rights entitlement on a stock exchange
The rights issue of Reliance Industries was subscribed 1.6 times as it closed on Wednesday.
The rights issue worth ₹53,125 crore was open for subscription from 20 May with a simultaneous rights entitlement (RIL RE) platform, wherein for the first time ever, shareholders could freely trade their rights entitlement on a stock exchange.
RIL's rights issue is the largest such share sale in the history of Indian equity capital markets.
According to stock exchange data, the rights priced at ₹1,257 per share received bids for 551.30 million shares on BSE and 120.29 million shares on NSE.
The stock closed at ₹1542.45, up ₹6.35 or 0.41% on Wednesday. Since the rights issue, the stock has risen 9.42% while it has seen a jump of only 2.79% in this year so far. The price of rights entitlement (RIL RE) surged 46.7% in seven trading sessions on the special platform for them, which closed on Friday.
The rights issue saw oversubscription as there was excess demand for shares from both the promoters and public shareholders, said two people aware of development, who spoke on the condition of anonymity.
"Most of the large public shareholders of the company including LIC subscribed to shares. Index funds, who can't hold partly paid up shares, had sold their rights entitlement using the stock exchange platform available to sell these entitlements," said one of the people cited above.
Mint reported last week that LIC was planning to subscribe to up to Rs3,000 crore worth of shares in the RIL rights issue.
Despite a covid-19 led disruption hitting business and capital markets, RIL has been on a fundraising spree.
Ahead of the rights issue, Reliance sold a 14% stake in Jio Platforms to multiple investors, including Facebook Inc., across deals worth ₹67,194.75 crore. The initiatives are aimed at helping RIL reach its ambitious goal of becoming a zero net-debt company by March 2021. RIL’s net debt stood at ₹1.53 trillion on 31 December.
The RIL rights issue allowed an existing shareholder to buy one new share for every 15 held. According to the terms of the offering, buyers will have to pay 25% of the price at the time of subscription, 25% in May 2021 and the rest in November 2021.
“RIL has successfully managed to position itself as a zero-debt tech company in an environment of the virtual economy taking precedence over real. This has the added advantage of taking attention away from a weaker near-term refining outlook. Positive triggers for the stock will continue to be partnerships that reaffirm or fortify this position: tech (Jio and JioMart) and zero debt (Aramco, fibre)," said analysts at Edelweiss Securities in a 27 May report.
It expects RIL to monetise 20% of Jio, along with partial proceeds from the rights issue and sale of fuel retail, free cash flow, would lead to cash proceeds of ₹1.3 trillion, thereby putting the company on the path to zero net debt in FY21.
As of 31 December, RIL's net debt stood at Rs1.53 trillion.
(With inputs from Ashwin Ramarathinam)
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