After merger, every 16 shares in RPL will convert to one in RIL
The Reliance Industries Ltd (RIL)-Reliance Petroleum Limited (RPL) merger is seen by Dalal Street as mostly win-win for all stakeholders.
Though both stocks ended the day down, experts see the deal as beneficial for the companies' shareholders in the near term.
Early on Monday, the RIL board approved a swap ratio of 16:1 for the merger. This means, after approval of the amalgamation by the court, every 16 shares in RPL will get converted into one RIL share.
Start up funds are going in for follow up investments in portfolio companies to avoid playing second fiddle to new investors attracted by low valuations
Fear of becoming minority players in their own portfolio companies is driving many venture capital firms into pumping in more money into them. This follows the almost rock bottom valuations for startup companies owing to the slowdown and cash flush VC firms and angel investors who are attracted to them.
VCs are looking to hold on to their stakes in these companies that have become prime targets for others, point out industry watchers.
The merger of Reliance Industries (RIL) and Reliance Petroleum (RPL) is likely to be earnings per share (EPS) accretive for RIL shareholders by 50 to 150 basis points, analysts have said.
The swap ratio of 1:16 represents a 3.5% premium to RPL’s share price on Friday (Rs 76.20 per share).
RIL bought back Chevron’s stake of 5% in RPL @Rs 60 —- the same price at which it was sold by RIL in 2007, giving promoters complete control of India’s largest private company —- not that Mukesh Ambani was particularly seeking it.
The swap ratio was more or less in line with street expectations, though it tilts a touch towards RPL shareholders.
Fear of becoming minority players in their own portfolio companies is driving many venture capital firms into pumping in more money into them. This follows the almost rock bottom valuations for startup companies owing to the slowdown and cash flush VC firms and angel investors who are attracted to them.
VCs are looking to hold on to their stakes in these companies that have become prime targets for others, point out industry watchers.
One route for this has been to co-invest along with new VC investors to prevent dilution of stakes.
Tata Steel's stock was up 5.6% to Rs 172.35 per share on Friday, a day the Sensex closed 0.71% down, after it announced consolidated results for the quarter ended December. The company posted a profit as against street expectations of loss at the net level.
Profit stood at Rs 813.89 crore after accounting for minority interest and share of profit of associates. This represents a 42.5% decline over the same period last year when the profit stood at Rs 1,415.54 crore. Hedging gains and better price realisation helped profits.
Wellington - Th
