The tech-giant Reliance Industries Limited (RIL) owned by billionaire Mukesh Ambani put its Rs. 53,125 crore rights issue for subscription to deleverage company’s balance sheet and make it debt-free. The issue is opened for subscription today (May 20, 2020) till June 03, 2020. The Rights Issue has been priced at Rs. 1,257 per share with share ratio at 1:15. The eligible shareholders will be entitled to 1 equity share for every 15 equity shares held as on record date (March 14, 2020). So, if a shareholder is holding 1500 shares of Reliance Industries Limited as on record date, he or she will be eligible to buy 100 right issue shares. However, it is not mandatory for eligible shareholders to ‘opt’ for the rights issue or may refuse they wish to.
This is the biggest equity offering by Reliance Industries Limited and the first right issue in the last three decades.
What is Rights Issue?
When a public listed company proposes fresh securities, giving the rights to its existing shareholders to purchase new shares of the company at a discounted price as on a record date is called rights issue. It is one of the routes for a company to raise funds, acquiring assets, or clear off debts. Unlike, FPO or Initial Public Offering (IPO), Rights Issue is best suited for a listed company to raise funds without diluting the stake of its existing shareholders.
And the ‘Record Date’ is the date set by the company on which the investors must own shares, to be eligible for dividend, share split, bonus shares, or in this case, rights issue.
How Investors can apply for RIL Rights Issue?
There are two ways which investors can apply for RIL rights issue which we will discuss one-by-one:
Method 01: From Internet Banking Account
Step #1: Login into your bank account.
Step #2: If your bank has enabled it, you will have the option to invest in IPO/Rights.
Step #3: Apply for Reliance Right
Step #4: Fill with the details of your folio and number of rights shares you want to apply.
Step #5: No amount will be debited from your bank, however for every share applied, you have to block Rs. 314.25 per share in the bank.
Step #6: Bank would want you to enable ASBA online. If you’ve not done it, do it already!
Step #6: The amount will be blocked in your bank account for the applied rights shares. Once the allotment is done, the amount will be debited from your bank account depends upon the allotted shares.
Method 02: To apply via RTA
Step #1: Visit the Karvy Fintech RTA website – https://rights.kfintech.com/.
Step #2: Apply for Rights Issue as it the issue is open for subscription.
Step #3: Select the depository with which you have a Demat account.
Step #4: Fill the asked details online – PAN, DP, ID, Folio no etc.
Step #5: Make the payment either via net banking or UPI. [Note: In UPI, there is a limit of Rs. 2 lakh]
Step #6: Unlike the previous method, here the money will be debited from your bank account immediately i.e. Rs. 314.25 for every share you applied. But, if the allotted shares are less than applied then the balance will be refunded into your bank account later by the company.