15 million shares sold at at an average price of Rs 2,125.
Reliance Industries today raised Rs 3,188 crore by selling its own shares, that could help it buy oil fields abroad.
It sold 15 million shares of treasury stock at an average price of Rs 2,125, a 2.7 per cent discount to Wednesday's close of Rs 2,183.5. The company's shares ended 4.5 per cent down at Rs 2,086.40, its lowest close since September 8, and its biggest daily fall since August 17.
Over 50 investors purchased the shares. The book was open from Wednesday evening all over the world. The stock came from Petroleum Trust, controlled by RIL’s promoters; it owned 104.7 million shares, or a 6.65 per cent stake, before the sale. The sale was arranged by Bank of America, Merrill Lynch and Citigroup.
RIL created the treasury stocks in 2002 when it merged its unit, Reliance Petroleum, wiht itself. In October last year, RIL Chairman and Managing Director Mukesh Ambani bought 120 million shares in the company in a warrant conversion. The company allotted 120 million warrants to Ambani in February 2007.
Reliance shareholders had approved the plan for Ambani to increase control in the company to beyond 50.62 per cent at the time and retain a majority if the company issues new shares to fund expansion.
While RIL said the sale of treasury stock would have no impact on the promoter holding, analysts said Ambani’s stake in the company could come off by 1 per cent after the sale. They also speculated that the promoters might offload the entire stake held by the Petroleum Trust in the next 12-18 months.
The Trust is controlled by the company management and the stock it holds is beneficially held on behalf of RIL shareholders. The Trust is a special purpose vehicle created for RIL’s holding in the earlier Reliance Petroleum after the 2002 merger. The stake of the Trust rose again when group company IPCL was merged with RIL.
RIL, in a media statement, said: “The Trust will realise Rs 3,188 crore at an average price of about Rs 2,125 per share. The shares are carried in the books at a cost of Rs 158 per share by the Trust. The financial impact will be reflected in the consolidated statements of the company.”
Analysts felt RIL may use the money to part-pay the debt it took for gas exploration or for acquisition of hydrocarbon assets abroad.
“If you say they have the requirement of funds to meet their capex or for their acquisition, they already are sitting on $4.5 billion. But one should not rule out this possibility of overseas acquisition,” said S P Tulsian, independent equity advisor.
Deven Choksey, of KR Choksey Securities said, “The company may use the money realised to pay a part of the debt taken for gas exploration. Only half of the potential production from RIL’s KG-D6 basin is being utilised, so it is important to bring down the interest cost.”
“The sale of stocks at Rs 2,125 a share gave a signal that management has capped the upside,” said Amitabh Chakrabarty, head of research at Religare Securities. “This led to correction in the stock price.”
