Reliance Industries Ltd (RIL) has appointed nine investment banks for its planned ₹53,215 crore ($7 billion) rights issue, said three people aware of the development.
The banks appointed to manage India’s largest such share sale include foreign banks Citigroup and Morgan Stanley and domestic bankers Kotak Mahindra Capital, JM Financial Ltd, Axis Capital and ICICI Securities, the people cited above said on condition of anonymity.
As part of the proposed rights issue, shareholders of Reliance will be offered one new share for every 15 held at ₹1,257 apiece. It’s the first right issue by India’s most valuable firm in three decades.
The issue will be structured as partly paid shares and will enable shareholders to phase out the outlay on their investment over a period of time.
Shareholders willing to subscribe to the issue will have to pay 25% on application and the rest in one or more tranches.
“The rights issue of RIL will be done under the fast track route, which allows companies that meet certain criteria set by Sebi to raise funds quickly with fewer compliances to worry about," said one of the people cited above.
RIL could file the rights issue offer document as early as in the next two weeks, he added. “The final launch timelines of the deal are yet to be firmed up but it could happen within the next one to two months," he said.
At 50% shareholding, Mukesh Ambani, Asia’s richest man, will have to pump in at least ₹26,600 crore to subscribe to his portion of the rights issue. Ambani and other controlling shareholders have pledged to buy the full extent of their entitlement and also subscribe to all unsold shares in the rights issue. The previous biggest share sales in India were the rights issues of Bharti Airtel Ltd and Vodafone Idea Ltd, both of whom raised around ₹25,000 crore each. The biggest initial share sale was that of Coal India Ltd, which raised ₹15,200 crore in 2010, while State Bank of India’s ₹15,000 crore sale to institutional investors in 2017 was the biggest such sale.
The rights issue is part of RIL’s plans to become a zero-debt company by the end of March 2021. Reliance’s net debt stood at ₹1.53 trillion as of 31 December.
An email sent to RIL remained unanswered. ICICI Securities, Citigroup and Morgan Stanley declined to comment, while emails sent to the other investment banks cited above remained unanswered.
Reliance is raising funds at a breakneck pace as it attempts to cut its debt and secure its capital needs amid a sharp downturn in the global economy. The collapse in oil prices and demand for fuels because of coronavirus-related lockdowns have led to the sharpest profit decline in nearly two decades at its main chemicals and refining division.
Meanwhile, Bloomberg reported on Thursday that RIL is considering selling 4.9% stake in Asian Paints Ltd valued at about $989 million as part of its efforts to trim its debt. The stake sale will be done through a series of block trades, the report added.
The size and timing of any potential sale haven’t been finalized, and Reliance could decide not to proceed with a deal, the Bloomberg report said
On 4 April, RIL announced that it has agreed to sell a 1.15% stake in unit Jio Platforms Ltd, which houses its telecom and digital businesses, to private equity investor Silver Lake Partners for ₹5,655.75 crore, days after it sold a bigger stake to Facebook Inc.
Facebook bet a massive $5.7 billion to purchase a little less than 10% of the stake.
Bloomberg contributed to this story