Reliance Industries' Rights Entitlement Surges 14% A Day Before Close

Reliance Industries’ rights entitlement (RIL RE) surged 14 per cent on Thursday to end at Rs 230 on the National Stock Exchange (NSE). The RIL RE trading window closes on Friday — three working days before the close of the company’s mega rights issue. Units worth nearly Rs 150 crore changed hands on the NSE and another Rs 554 crore on the BSE. This is the first time trading in rights entitlement is taking place after market regulator Sebi introduced the concept in January.

Investors buying one RIL RE will be eligible to apply for one share under the rights issue programme.

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Existing shareholders of RIL who didn’t wish to apply in the rights offering can sell their entitlement on the exchange platform. Market players said RIL rights issue gave a perfect start to the RE trading platform. They, however, said it remains to be seen if there is enough liquidity for smaller issues. SP Tulsian of sptulsian.com, an investment advisory firm, said RIL RE could surge past Rs 250 on the last day. RIL has fixed the rights issue price at Rs 1,257 per share. At Thurday’s RIL RE price of Rs 230, the total acquisition cost to buy one RIL share works out to Rs 1,487. Shares of RIL closed at Rs 1,473, up 1.8 per cent on Thursday.

Tulsian said people are willing to pay a premium to subscribe in the rights issue as they have to make staggered payments in three installments and the acquisition price remains fixed.

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By June 3, invesotors have to pay 25 per cent of the issue price (Rs 314.25), another 25 per cent (Rs 314.25) in May next year and the remaining 50 per cent (Rs 628.5) in November 2021. Partly paid-up shares of RIL will be traded separately once the rights issue allotment takes place next month.