Reliance Industries mega ₹53,124 crore rights issue is the largest in the world by a non-financial issuer in the last 10 years, an analyst said.
Oil-to-telecom conglomerate Reliance Industries Ltd’s rights issue opened for the subscription of shareholders on 20th May and will close on Wednesday. According to data from Dealogic, as the issue is the biggest in the world by a non-financial issuer in the last 10 years. The only non-financial issuer close to issuing size is USD 7.002 billion issue by Bayer AG in June 2018.
Billionaire Mukesh Ambani‘s firm had on April 30 announced fundraising of ₹53,125 crores by way of a 1:15 rights issue — India’s biggest and the first such issue by the firm in nearly three decades. One share will be offered for every 15 shares held at ₹1,257, a 14 percent discount to the closing price for April 30. The issue had been over-subscribed 1.1 times as of on Monday, that according to stock exchange data.
The biggest rights issue since the global financial crisis of 2008 is the USD 19.57 billion issues by HSBC Holdings Plc in April 2009, according to Dealogic. Deutsche Bank’s USD 13.96 billion issues in October 2010 is the second biggest closely followed by USD 13.69 billion issue by UniCredit. From Asia, the biggest offering was by the Bank of China in December 2010 with an issue size of USD 8.96 billion. The rights issuance is the 1st by Reliance in 3 decades.
The last time Reliance has tapped the public for funds was in 1991 when it had issued convertible debentures. The debentures were subsequently converted into equity shares at ₹55 apiece. Ambani had unveiled plans to cut debt to zero by 2021 August last year. At the end of March quarter, RIL had an outstanding debt of ₹3,36,294 crore. It also had cash in hand of ₹1,75,259 crore, bringing the net debt position to ₹1,61,035 crore. Reliance has sold a minority stake in its digital unit Jio Platforms to Facebook and top private equity funds.
It is talking to Saudi Aramco for selling a fifth of its oil-to-chemicals business for an asking of the USD 15 billion and also has sold half of its fuel retail venture to BP Plc for ₹7,000 crores and telecommunication tower business to the Brookfield for ₹25,200 crores. Together, proceeds from those transactions will result in a reduction in RIL’s net debt. Last month, Moody’s Investors Service stated that the rights issue is credit positive as earnings will decline due to economic shutdowns.