Oversubscribed 130%, RIL issue largest in the world in a decade by non-finance co

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New Delhi; Reliance Industries Limited (RIL) rights issue oversubscription reached 129.8 per cent with one day still to go. As per data, applications for 8.8 crore plus shares were received on Tuesday.

Dealogic has put together a list of USD 7 billion plus rights issues globally since the financial crisis of 2008. It shows that the RIL rights issue emerges as the world’s largest by any non-financial company in last 10 years. RIL’s Rs 53,124 crore rights issue, oversubscribed on Monday itself, received bids for another 8.8 crore shares on Tuesday taking cumulative demand to nearly 54.9 crore shares – an oversubscription of 130 per cent, according to stock exchange data.

The issue subscription data on stock exchanges showed that at 5 pm on June 2, 2020, total bids received for RIL’s rights shares stood at 54.9 crore overshooting the 42.26 crore shares on offer by 29.8 per cent. Tuesday’s large subscription addition goes in line with the well-observed phenomenon that various investor classes apply towards the end. The oversubscription figure suggests that shareholders are applying for many more shares than their entitlements.

This means, the final oversubscription number can potentially rise to 1.6 – 1.8 times. Those subscribing to the rights shares by June 3 can expect allotment of partly paid RIL shares by Thursday, June 11 2020, in their demat accounts. These partly paid shares will be separately listed on stock exchanges and their trading will begin from Friday, June 12, 2020, according to the issue schedule given in the Letter of Offer.

RIL has come out with a rights issue first time in three decades to enable all shareholders participate in its growth consumer/technology businesses, where new strategic investors have started joining. Under the issue, shareholders will get fresh shares of the company at a price of Rs 1,257 each and need to pay the amount over 18 months in three instalments – 25 per cent on application by June 3, 2020, 25 per cent in May 2021 and 50 per cent in November 2021, making the issue most investor-friendly.

Reliance Industries enjoys support of a very large number of shareholders. It has over 25.4 lakh retail shareholders. Over 1,700 institutional investors – domestic as well as foreign – are invested in the company. Earlier, Reliance Industries created a whole new trading instrument in the form of REs which had premium valuation, liquidity and interest engaging quality investors.

The REs never traded at below intrinsic during the renunciation period, which is a milestone in Indian capital markets. (It is observed that right entitlements traded at an average 43 per cent discount to intrinsic value in similar issues of the recent past.) RIL-REs created a value of Rs 9,500 crore for the company’s shareholders, when the online trading ended on Friday, May 29.