India's biggest rights issue of ₹53,000 cr by Reliance gets ₹84,000 cr of bids

Mumbai: Reliance Industries Ltd on Wednesday completed the nation's biggest-ever rights issue of Rs 53,124 crore after it closed with an oversubscription of nearly 1.6 times, the company said.

The world's biggest rights offering by a non-financial company in at least a decade was oversubscribed 1.59 times, cumulating to an overall commitment of over Rs 84,000 crore.

"The Rights Issue saw a huge investor interest, including from lakhs of small investors and thousands of institutional investors, both Indian and foreign," a company statement said.

The public portion of the rights issue was subscribed 1.22 times.

In the rights issue, the company is offering one share for every 15 shares held at Rs 1,257. ‎RIL shares closed at Rs 1,542.45 apiece on the BSE on Wednesday.

The Rights Issue Committee of the Board of Directors of the company will meet on or about June 10 to approve the basis of allotment of equity shares.

The rights shares are expected to be listed on the BSE and NSE on or around June 12, 2020 under separate International Securities Identification Number (ISIN), the firm said.

Commenting on the success of the rights issue, Mukesh Ambani, chairman and managing director of Reliance Industries Limited, said the issue is a new and proud landmark in the history of India's capital market.

"Since the time of Dhirubhai Ambani, the Founder of Reliance Industries Limited, our shareholders have always been our biggest source of strength. Our decades old relationship based on trust has consistently spurred us to achieve more. We are delighted and humbled by their extraordinary show of confidence in the future of Reliance," he said.

The success of RIL's rights issue, seen in the context of the prolonged nationwide lockdown necessitated by the COVID-19 pandemic, is also a vote of confidence, by both domestic investors, foreign investors and small retail shareholders, in the intrinsic strength of the Indian economy, he said.

"I have no doubt that the Indian economy will bounce back to follow a high growth trajectory in the time to come in the World," he added.

The company, as per the issue offer document, will use three-fourth of the proceeds of its mega rights issue for repayment of some of its borrowings.

The company expects net proceeds of Rs 53,036.13 crore from the issue after accounting for legal and other expenses.

Shareholders will have to pay only 25 per cent for subscribing to the company's mega Rs 53,125-crore rights issue, and the balance will have to be paid in two installments in May and November next year, the company had previously said.

The last time RIL tapped the public for funds was in 1991 when it had issued convertible debentures. The debentures were subsequently converted into equity shares at Rs 55 apiece.

Ambani had in August last year unveiled plans to cut debt to zero by 2021.

As part of this plan, RIL has been seeking strategic partnerships across its businesses, while targeting to deleverage the balance sheet.

At the end of the March quarter, RIL had an outstanding debt of Rs 3,36,294 crore. It also had cash in hand of Rs 1,75,259 crore, bringing the net debt position to Rs 1,61,035 crore.

As part of its balance sheet deleveraging plans, Reliance has sold minority stakes in its digital unit Jio Platforms to the likes of Facebook and private equity firms.

It is also talking to Saudi Aramco for selling a fifth of its oil-to-chemicals business for an asking of USD 15 billion. It has sold half of its fuel retail venture to BP Plc for Rs 7,000 crore and telecommunication tower business to Brookfield for Rs 25,200 crore.

Proceeds from these transactions will result in reduction in RIL's net debt.