Ambanis’ stake in RIL at 12-year high after rights issue

Mumbai: Billionaire Mukesh Ambani has increased his stake in Reliance Industries to a 12-year high of 49.14% after the conclusion of the firm’s mega rights issue recently. Ambani and other members of the promoter family committed to invest 28,286 crore and subscribed to 225 million shares in the 53,124 crore issue.Regulatory filings show that the promoter family picked up additional shares from the unsubscribed portion of the issue raising their stake to nearly 50% of RIL’s paid-up equity capital.“In uncertain times like this, a promoter infusing such a massive amount in his business gives a huge confidence to investors about his commitment to the company’s future growth and will also boost investor sentiment,” said Raamdeo Agrawal, chairman, Motilal Oswal Financial Services.RIL shares, which rallied 82% from March 23, ended at 1,589, up 3.34% on Friday. The company is currently valued at 10.07 lakh crore. RIL completed the allotment of partly paid-up rights issues shares on Thursday.The promoter family’s stake in RIL declined from 51.37% in June 2008 to 44.71% in September 2011. Since then it rose gradually to 46.16% in June 2019. However, in the September 2019 quarter, the promoter stake increased to 48.87% after Ambani’s firm Petroleum Trust acquired 171.8 million shares, or 2.71% of RIL.The strong response to RIL’s rights issue has rekindled interest in this instrument for companies looking to bolster capital to manage the post-Covid situation. Over a half dozen companies have announced rights issues in the last two weeks to raise about Rs 10,000 crore.76351712“The success of RIL’s rights issue and infusion of huge liquidity by the promoter during the Covid-19 pandemic is a biggest confidence booster not only for RIL but also for India as well,” said Sanjeev Prasad, co-head, Kotak Institutional Equities. “Though RIL’s refinery business is not doing so well currently, its chemical business has shown impressive growth while telecom has managed to gain leadership position and is going to do well in future. The company has consolidated its retail business to take on ecommerce giants,” he added.RIL’s partly-paid rights issue shares are set to make stock market debut on Monday.State-owned Life Insurance Corporation subscribed to 24.7 million shares to take its shareholding to 371.8 million, or 6% of total equity. Post rights issue, the public shareholding has marginally declined to 49.71% from 49.93%, the exchange filing showed.The number of foreign portfolio investors holding in RIL has increased to 1,395 on June 11, 2020 versus 1,318 on March 31. FPIs now hold 24.15% of RIL, up from 23.48% in March.RIL’s rights issue saw a whole new trading instrument in the form of right entitlements (REs). The REs were credited to the demat accounts of eligible shareholders and were listed on stock exchanges between May 20 and May 29, 2020.RIL, which has emerged as the highest fund-raiser through shares sale across all listed companies globally so far in 2020, is looking to be a zero net debt firm by end of current fiscal. It has announced a flurry of share sales in subsidiary Jio Platforms. Apart from the rights issue, RIL has raised Rs 97,885.65 crore by selling a little over 21% in Jio Platforms to several global giants. As of March 31, RIL had outstanding debt of Rs 3,36,294 crore and cash in hand of Rs 1,75,259 crore, bringing net debt position to Rs 1,61,035 crore.

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