The talks with New York-based private equity firm General Atlantic to sell a 2% stake in Jio Platforms Ltd for ₹10,000 crore are among a series of stake sale initiatives by Reliance Industries Ltd to build confidence among potential investors as it heads for a mega rights issue, said two people on condition of anonymity.
On 30 April, RIL had announced plans to raise ₹53,125 crore through a 1:15 rights issue (one new share for every 15 shares held) at an offer price of ₹1,257 a share. The record date for the issue is 14 May.
“This is a very large rights issue, considering the current market sentiment. The overall market sentiment is subdued. There is a lot of economic uncertainty. That is one of the main reasons why the proposed rights issue is being kept as a partly paid-up issue, which means any subscriber can buy the rights issue shares by only making a part payment now and the rest within a period of six months or a year,” said one of the two people. “Within that time, RIL promoters too can comfortably bring in enough money to subscribe to the rights issue. The global investments in Jio Platforms will build confidence among investors, which will help RIL successfully complete the rights issue.”
Shareholders willing to subscribe to the rights issue will have to pay 25% on application and the rest in one or more tranches. With 50% shareholding, RIL’s promoter group led by Mukesh Ambani will need ₹26,600 crore to subscribe to its portion of the rights issue.
“At least 25% or ₹6,650 crore will have to be brought in as upfront amount to subscribe to the rights issue,” said the person cited earlier.
Ambani and other controlling shareholders have committed to buy to the full extent of their entitlement and subscribe to all unsold shares, Reliance had said. The opening and closing dates of the issue have not been announced yet.
The stake sale talks have propelled RIL’s share by 39% since 15 April to ₹1,595, creating a larger discount for potential subscribers and lifting chances of robust subscription despite weak markets.
On Monday, the rights issue offer price was at a 20% discount to the stock’s average price of ₹1,592 apiece. “The capital raising is serving three purposes, enabling RIL to reduce its debts, bringing in strong global investors to strengthen Jio’s business expansion plans and building confidence among market participants for the upcoming rights issue,” added the person cited earlier.