Reliance Industries (RIL) subscribed 1.1 times on Monday, two days before Rs 53,124 crore Mega Rights issue closed. As per the issue subscription data of the stock exchange, bids are received for 46.04 crore shares for RIL’s rights issue till Monday. This is 8.9% higher than the offered size of 42.26 crore shares. Now what’s Over Subscription- It means that shareholders have applied for more shares than their entitlements.
Subscription figures may go up in the next two days
There are two more days left for the rights issue to close. It is seen that in such an issue in which the allocation of shares is fixed, institutional investors invest in the last days. It means that the subscriber’s final tally is about to increase massively.
Mukesh Ambani, the owner of Reliance Industries and the promoter group, has said that “They will apply for as many shares as they have entitlement. Also, the number of shares for which no bid will be received will subscribe to all those shares,”.
RIL created an entirely new trading instrument in the form of RE’s which had premium valuation, liquidity, and interest engaging quality investors. The RE’s never traded at below internal during the renunciation period, which is a landmark in Indian capital markets.
Recently, RIL’s over-subscription statistic is better than Reliance Industries’ corresponding to this rights issue and all the issues that have come up. 5-8% oversubscribed the rights issue of Bharti Airtel and Vodafone Idea. The size of the rights issue of these two was less than half of RIL. This right issue of RIL will close on June 3. This is the company’s first rights issue in three decades.
75 percent of the Rights issue funds target to reduce debt
In this issue, the company has given the right privilege of one share for every 15 shares to eligible shareholders. The offer price of the issue is Rs 1,257. Reliance Industries closed at Rs 1,520.45 on BSE on Monday. As per the issue offer document, this issue will use three-fourths of the funds raised by the company to mitigate its debt. The company is expected to get Rs 53,036.13 crore from this issue after deducting legal and other expenses. Of this, Rs 39,755.08 crore will reduce debt. The remaining Rs 13,281.05 crore will be used for general corporate operations.
The company’s end-goal is to reduce its net debt to zero by 2021
In 1991, RIL raised funds from common people. The company issued an adjustable debentures. Later, these debentures were converted into shares at the rate of Rs 55 each. Ambani said in August in 2019 that the company wants to mitigate its net debt to zero by 2021. To achieve this end-goal, the company is looking for strategic partners in its various verticals, and through this, reducing its debt.
The company had a net debt of Rs 1,61,035 crore at the end of the March Quarter.
The company had a debt of Rs 3,36,294 crore at the end of the March quarter. The company also had cash of Rs 1,75,259 crore. Thus, the company’s net debt was Rs 1,61,035 crore. As part of its debt reduction plan, RIL has sold a minority stake in its digital unit Jio Platforms to Facebook and other private equity companies.
The company is also in talks with Saudi Aramco to sell a 20% stake in its oil and chemicals business for $15 billion. The company has sold half of its fuel retail business to BP Plc for Rs 7,000 crore. the company has sold half of the telecom tower business to Brookfield for Rs 25,200 crore.