Reliance Industries-Rights Entitlement (RIL-RE) share price plunged as much as 8.17 per cent to Rs 214.70 apiece on the National Stock Exchange (NSE). In the last two sessions, RIL-RE price soared nearly 54 per cent from an opening price of Rs 152 on May 20 to Rs 233.60 at Thursday’s close. This is for the first time that Rights Entitlements (RE) were allowed to trade in India after market regulator Sebi introduced this platform earlier this year. With rights entitlements getting listed on the exchanges, it has become easier for the investors to sell their entitlement over the rights issue. Using this platform, buyers who are interested to buy rights can easily apply for the issue. “A person may directly purchase shares of Reliance or they may purchase the REs at a slight premium since there are aspects of downside protection which one gets if they purchase an RE. Volatility and time till last trading date are some factors which will influence its price,” Mohit Mehra, business analyst at Zerodha told Financial Express Online.
India’s biggest-ever rights issue will remain open for the eligible investors till June 3, 2020, and the rights entitlements can be traded till May 29. Intraday trading is not allowed in the rights entitlement instrument since it’s meant to allow rights to be exchanged without encouraging speculation, explains Mohit Mehra. “The value of Reliance REs also depends on the value the market assigns to the yet to be listed partly paid shares of Reliance Industries,” Mehra added saying that these partly paid shares may either trade at a premium or discount to the ordinary shares which are currently listed. These partly paid-up Rights Entitlement shares will be allotted and credited to eligible shareholders or investors by June 11 and listed on the exchanges on June 12, 2020.
The company is offering shares to existing investors in the ratio of 1:15 at a price of Rs 1,257 per share. The investors who wish to subscribe need not pay the entire amount in one go. The company has asked investors to pay only 25 per cent at the time of subscription. While out of the rest 75 per cent, investors will have to pay 25 per cent in May 2021 and the remaining 50 per cent in November next year.