Reliance Industries jumps over 3% after company fixes rights issue date

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Reliance Industries Ltd (RIL) shares jumped more than 3% in morning trade on Monday, looking to extend its winning streak into the fifth consecutive session, after billionaire Mukesh Ambani-led oil-to-telecom major fixed May 14 as the record date for the country’s biggest rights issue.

The stock has gained 5.6% this year, as Reliance struck three deals in the past few weeks for some $8 billion in investments into Jio Platforms, its digital arm.

The shares touched an intraday high of Rs 1,614 and a low of Rs 1,580, having opened at Rs 1,582 apiece on the bourse.

Reliance Industries said, in a regulatory filing to the exchanges late on Saturday, the company will notify the opening and closing dates for the rights issue separately.

“We inform you that the Rights Issue Committee constituted by the Board of Directors of the company has, at its meeting fixed Thursday, May 14, 2020, as the ‘Record Date’ for the purpose of determining the equity shareholders entitled to receive the rights entitlement in the rights issue,” RIL said.

The decision to fix the rights issue was taken by the company’s board at a meeting held on May 9.

Reliance Industries had set a price of Rs 1,257 per share for the rights issue with a ratio of 1:15 on April 30. This means one RIL share will be offered for every 15 shares held at Rs 1,257 or a 14% discount to the closing price on April 30.

Shareholders willing to subscribe to the issue will have to pay 25% on application and the rest in one or more tranches.

Mukesh Ambani, at 50% shareholding, will have to pump in at least Rs 26,600 crore to subscribe to his portion of the rights issue.

Reliance had said earlier that Ambani and other controlling shareholders have pledged to buy to the full extent of their entitlement and also subscribe to all unsold shares in the rights issue.

The rights issue is the first of its kind for Reliance Industries in almost 30 years.

The company had issued convertible debentures to raise funds from the public in 1991. The Sensex had gained 613 points or 1.9% at 32,245 and the Nifty had added 170 points or 1.7% at 9,423 at the time.

The three investments in Jio Platforms are expected to fast-track RIL’s target of emerging net debt-free on a net cash basis by March 2021.

Facebook had announced on April 22 that it will invest Rs 43,574 crore in Jio Platforms for a 9.99% stake. Silver Lake said on May 4 it would invest Rs 5,655.75 crore for a 1.15% stake at an equity value of Rs 4.90 lakh crore.

Vista Equity Partners picked a 2.32% stake for Rs 11,367 crore four days later.