, controlled by billionaire Mukesh Ambani, plans to carry out a Rs 1,071-crore ($129-million) share buyback programme, which will allow the business tycoon to hold 100% of the country’s largest retailer. It will repurchase the shares trading in the grey market and allotted to employees as stock options at Rs 1,362 apiece, which values the company at Rs 12.25 lakh crore ($148 billion).
In the grey market,
Retail’s shares are sold at Rs 3,000 apiece. The programme will be executed by reducing Reliance Retail’s equity capital to the “extent held by shareholders other than its founders and holding company
Reliance Retail Ventures
)”, it said in a regulatory filing on Friday. “Upon such reduction, these shares held by such shareholders shall stand cancelled,” it said.
RRVL holds 99.91% of Reliance Retail with the remaining 0.09% being held by non-promoter shareholders. Reliance Retail said it is paying a premium (Rs 1,362 apiece) over the price of Rs 884 and Rs 849 apiece determined by valuers Ernst & Young Merchant Banking Services and
BDO Valuation Advisory
It observed that its shares are traded privately at random prices quoted by some brokers/intermediaries on their websites and that – since such trading can never result in any fair price discovery – it decided to repurchase its stock. Moreover, it does not have any plan to list its shares on the stock exchanges and, so, at some point its shares will lose marketability and liquidity, resulting in a no exit opportunity for non-promoter shareholders.