Reliance Jio (99.2% subsidiary of RIL) has announced a rights issue of Rs150bn. Given RIL is effectively the only shareholder of Jio, the company using a rights issue to infuse equity into the company may come as a bit of a surprise. The equity infusion itself is, however, not a surprise given a meaningful portion of Jio?s cRs1,000bn capex thus far is in the form of deferred capex (capital creditors, deferred spectrum payment, etc.), and as Jio is gearing up for commercial launch (possibly in Mar/Apr).
Going by Mukesh Ambani's business track record, we think this might be a route to bring in a strategic partner into Jio (by renouncing of rights in favour of another entity). Also, they will be planning massive Stock Options to Key Personnel and Akash & Isha Ambani details of which are probably being worked out.
