RIL is finalising 1st rights offer in 29 years

Mumbai: Reliance Industries (RIL), India’s most valued company, is planning a rights issue — its first fund-raise from the public in 29 years. The company has not disclosed the amount of money it plans to raise through the rights offer, or any other details about it.Through a stock exchange notice on Monday, RIL said its board will meet on April 30 to “consider a proposal to issue equity shares to existing shareholders on rights basis”. Early this month, RIL had said that the board had approved a proposal to raise Rs 25,000 crore through non-convertible debentures (NCDs).RIL chairman Mukesh Ambani will lead a board meeting on Thursday to consider the proposal of issuing new shares to existing shareholders, currently numbering over 23 lakh, according to data from the BSE. Ambani and his family owns 50% in RIL, which currently has a market capitalisation of nearly Rs 9.1 lakh crore.During rights offers, the promoters can avoid diluting their stake in the company by subscribing to their share of quota in the offer. In case other shareholders do not subscribe to their individual quota, even those shares could be bought by existing shareholders, including the promoters.The RIL’s rights issue proposal comes days after it inked India’s largest FDI deal, in the technology sector, with social media giant Facebook to raise Rs 43,574 crore by selling 9.9% in Jio, its digital platform business. Analysts see the rights issue proposal as RIL’s move to reduce its debt of $43 billion further. RIL had also planned to use the proceeds from the sale of its stake in Jio Platforms to deleverage its balance sheet.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.Apart from the rights issue proposal, the board of RIL will also consider the financial statements of the $90-billion explorations-to-telecom company. Fiscal 2020’s fourth quarter results of RIL’s core business could be impacted as demand for transportation fuels have slumped due to the Covid-19 outbreak.Retail (specifically grocery) and telecom could see limited impact because of the increased consumption during the lockdown.

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