Reliance Industries, the largest listed company by market capitalisation, has announced the biggest ever rights issue that is set to open on May 20, 2020. The Right Issue size is ₹ 53,125 crores. It is the biggest ever rights issue in India. The subscription for rights issue is scheduled to open this week on May 20.
RIL’s Rights Issue schedule
|Issue Opening Date||May 20 2020, Wednesday|
|Last Date for On Market Renunciation||May 29 2020, Friday|
|Issue Closing Date||June 3 2020, Wednesday|
|Finalisation of Basis of Allotment||June 10 2020, Wednesday|
|Date of Allotment||June 10 2020, Wednesday|
|Date of Credit||June 11 2020, Thursday|
Details of the RIL’s Right Issues
The experts say RIL’s rights issue is decently attractive and reasonably priced. The last closing price of RIL shares is ₹1,458.90 on May 15. Please take it as a discount of 16 per cent to the closing price for May 15. This is the offer with high growth potential at a discounted price.
|Number of Rights Equity Shares by the RILS||42,26,26,894 Equity Shares|
|Issue Size||₹ 5,31,24,20,05,758|
|Rights Entitlements||1 Rights Equity Share is to every 15 Equity Shares (1:15) held on the Record Date, i.e. May 14, 2020|
|Record Date||May 14 2020|
|Issue Price||1,257 per Rights Equity Share (a premium of ₹ 1,247 is included)|
Note the Terms of Payment:
- Issue price ₹ 1,257 is included a premium of Rs.1247 per Rights Equity Share.
- Investors need to pay 25% of the Issue Price, i.e. ₹ 314.25 per Rights Equity Share at the time of application.
- The remaining call money 75% of the Issue Price, i.e. 942.75 per Rights Equity Share is to be paid on one or more subsequent Call.
- The Board will decide the time for call money with sole rights.
- It may be one or more subsequent calls as per the decision of the Board of the company.
- No payment by cash/cheque. No payments using third party bank accounts. Investors need to make payments only through a bank account in their name. In the case of joint holders, all joint holders need to sign the subscription Form.
What are Rights Issue Shares?
A listed company has the option to raise capital through its existing shareholders. It can offer rights issue shares to its current shareholders for raising additional funds. The company doesn’t go to the public and gives the right to subscribe to its existing shareholders. The allotment takes place in proportion to their current holdings. The company will decide the ratio of allotment.
RIL’s Objective to offer the Mega Issue
The Objective to offer the rights issue is to cut down the company’s debt raised with the expansion of retail, telecom, and digital avenues and make itself a net debt-free by March 31 2021. retail, telecom and digital avenues.
The company is expected to raise the capital over Rs 1.04 Lakh crore by Q1 this financial year. The capital of Rs. 43,574 crores have already increased by the investment of Facebook in Jio Platforms.
Essential Things To Consider About Reliance Industries Right Issue Shares:
- Issue size: 42,26,26,894 equity shares
- Issue Price including premium: 1,257 Per Rights Issue Share
- Opening Date: May 20 2020
- Closing Date: June 12 2020
- Rights entitlement ratio: 1:15 (1 right issue share for every 15 existing equity shares)
- Rights Issue Size: ₹ 53,125 crores
- Three instalments of the right issue payment – 25% at the time of subscription – Another 25% in May 2021 – the balance 50% in Nov 2021
Promoters show confidence in the company’s growth and pledged to buy the full extent of their entitlement, i.e. 50.07% stake. They have demonstrated a commitment to subscribe to all unsold shares.
Opportunity for Investors
This is the opportunity for existing shareholders at a discounted price. Investors will be a part of the company’s growth. The rights issue is providing an excellent opportunity to participate in the high growth of new and emerging ventures.
Majority of financial market experts are advising shareholders to participate in the most extensive rights issue of Reliance – the most valuable Indian company.
Some rules to be followed by investors:
- The investors with successful allocation will get an email containing Allotment advice by the Company and the Registrar.
- Share certificates will not be available in the physical form.
- Within six months from the Allotment Date, Shareholders must send a communication to the Registrar for the confirmation of Demat account, the name(s), address, email, contact details, and PAN either by post OR email or hand delivery to take the Rights Equity Shares allotted in Demat account.
- Voting rights will not be accessible against the Rights Equity Shares reserved in the Demat suspense account.
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