Reliance Industries rights issue opens today; here's all you need to know about biggest-ever fundraiser

Oil-to-telecom conglomerate’s Reliance Industries Ltd (RIL) rights issue - the biggest-ever rights issue – will open for subscription for shareholders today (20 May) and close on 3 June. One share will be offered for every 15 shares held at Rs 1,257.

#Reliance said that it will raise up to Rs 53,036.13 cr, of which Rs 39,755.08 cr would be used for paring debt.https://t.co/mnFAQDQOa3

— CNBC-TV18 (@CNBCTV18Live) May 20, 2020

Of the Rs 1,257 per share price, only 25 percent is to be paid at the time of subscription. A similar amount will be due for payment in May 2021 and the balance 50 percent has to be paid in November 2021, the company said in a regulatory filing. “The rights issue committee of the board of directors, in its meeting held on 17 May, 2020, has proposed the following schedule for payment of the balance amount of Rs 942.75 per rights equity share - Rs 314.25 i.e. 25 percent in May 2021; and Rs 628.50 i.e. the balance 50 percent in November 2021,” it said. The board, it said, would make the calls for this purpose at the relevant time. [caption id=“attachment_4818281” align=“alignleft” width=“380”]  RIL logo. Reuters[/caption] Reliance Industries has already garnered Rs 67,195 crore through stake sale in Jio Platforms in four weeks ahead of its rights issue. Reliance Industries sold a total of 14.81 percent stake in its wholly owned subsidiary, Jio Platforms, to three private equity investors— Silver Lake , Vista Equity Partners and General Atlantic —and Facebook Inc . The Facebook deal was the biggest as Jio raised Rs 43,574 crore by selling 9.99 percent stake to the WhatsApp owner. Here’s all you need to know about Reliance Industries rights issue Subscription opening, closing dates The rights issue will open for subscription for shareholders tomorrow (20 May) and close on 3 June. Rights Issue size Billionaire Mukesh Ambani-owned Reliance Industries’ rights issue size is Rs 53,125 crore and it will issue 42,26,26,894 equity shares. India’s biggest-ever right issue has been priced at Rs 1,257 per share which had ex-right date at 13 May, 2020. Rights Issue ratio The rights entitlement ratio is 1 equity share for every 15 equity shares held by eligible shareholders as on the record date which was 14 May. Terms of payment of issue price The terms of payment will be 25 percent on application and balance in one or more calls as may be decided by the board of directors from time to time. At the time of application, shareholders will pay Rs 314.25 per rights equity share (face value Rs 2.50 + premium Rs 311.75), and the balance amount of Rs 942.75 will be payable in one or more subsequent calls as determined by the board of directors, from time to time. Accordingly, the company proposed the schedule for payment of the balance amount of Rs 942.75 per rights equity share. Shareholders can pay Rs 314.25 i.e. 25 percent in May 2021; and Rs 628.50 i.e. the balance 50 percent in November 2021. Promoters’ commitment Promoter and promoter group with 50.07 percent stake have pledged to buy the full extent of their entitlement and also subscribe to all unsold shares in the rights issue, which shows the promoters commitment and confidence in the company’s future growth prospects, Tapse said. Objective of Issue The reason to come out with rights issue to existing shareholder is to pare down the company’s debt which over the years has piled up through expansion of its retail and telecom arm and make company a net debt free by March 31, 2021. Part of capital raising programme The company is expected to complete the capital raising programme totaling over Rs 1.04 Lakh crore by Q1 of the current financial year. This includes the investment by Facebook in Jio Platforms (already garnered Rs 43,574 crore), the upcoming rights issue and the previous investment by British Petroleum in FY2019-20. (Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Firstpost)