RIL gains 1% on General Atlantic deal; rights issue to open on Wednesday

RIL on Sunday announced selling 1.34 per cent stake in its digital services subsidiary, Jio Platforms, to PE firm General Atlantic for Rs 6,598.38 crore to accelerate consumer business and cut debt.

Shares of Reliance Industries (RIL) were trading 1 per cent higher at Rs 1,475 on the BSE in the early morning trade on Monday in an otherwise subdued market after Mukesh Ambani-controlled firm on Sunday announced selling 1.34 per cent stake in its digital services subsidiary, Jio Platforms, to private equity (PE) firm General Atlantic for Rs 6,598.38 crore to accelerate consumer business and cut debt. In comparison, the S&P BSE Sensex was down 0.46 per cent at 30,996 points at 09:18 am.

This is the fourth such stake sale within a month and it values Jio Platforms at Rs 4.91 trillion on an equity basis and Rs 5.16 trillion on an enterprise-value basis. So far, RIL has raised Rs 67,194.75 crore by selling 14.8 per cent in Jio.

Alongside the Jio stake sale, RIL is hoping to raise Rs 53,125 crore in the country’s biggest-ever rights issue. As of March 2020, RIL’s gross debt stood at Rs 3.36 trillion and net debt stood at Rs 1.61 trillion. These deleveraging initiatives, along with the proposed stake sale to Saudi oil giant Aramco, will help the company become net debt-free by March 2021.

With the aggressive fund raise, analysts at BOB Capital Markets believe RIL has enough ammunition to target a major inorganic move that taps into the massive valuation discounts on offer during the ongoing global economic freeze.

Meanwhile, the Rs 53,125 crore rights issue of RIL will open for subscription on Wednesday, May 20, and closes on June 3, the company said in a regulatory filing.  This is the first rights issue by RIL in nearly three decades. It will be priced at Rs 1,257 a share, with a share ratio of 1:15. The stock already traded ex-rights issue on May 13.

The payment terms will be 25 per cent on application and balance in one or more calls. On application, the shareholders will pay Rs 2.50 on face value and Rs 311.75 on premium, totaling to Rs 314.25 per rights equity share. The remaining Rs 942.75 will be payable in one or more subsequent calls as determined by the board of directors from time to time.