At a time foreign institutional investors are supposed to be keeping away from the Indian market, the Mukesh Ambani-controlled Reliance Industries has got a Rs 2,000 crore (Rs 20 billion) investment from one of the largest American funds.
Europacific Growth Fund, managed by the Capital Group, bought 16.13 million shares, or a 1.02 per cent stake, in RIL from the open market in the March-ended quarter.
When share prices were down in the fourth quarter, Life Insurance Corporation added 2.4 million shares of RIL to its kitty, taking its stake to 5.52 per cent. The purchase would have cost LIC over Rs 250 crore (Rs 2.5 billion). LIC had also bought over six million shares of RIL in the third quarter, at an investment of around Rs 800 crore (Rs 8 billion).
With these transactions, the institutional holding in the company has risen to 25.22 per cent from 24.55 per cent. The FIIs' holding has risen to 15.99 per cent from 15.52 per cent.
"RIL's largest gas find in the country at the Krishna Godavari field and the new refinery of Reliance Petroleum at Jamnagar will add more value to the company in the coming days. When the market bounces back, the American fund's investment in RIL will be valued higher," said a Mumabi-based analyst.
RIL will initially produce 15 million cubic metres gas a day from the KG basin. The output from the D6 block in the basin will rise to 40 million cubic metres a day by July and 80 million cubic metres a day in 2010.
RIL subsidiaries, including Reliance Chemicals (1.98 per cent stake), Reliance Polyolefins (1.94 per cent) and Reliance Universal Enterprises (1.81 per cent), have continued as institutional investors.
As these three RIL companies had changed their status to subsidiary from the earlier 'classified promoter group' firms during the September-ended quarter, their stake comes under the public category and so does not carry any voting right.
In the March-ended quarter, the share price of RIL had fluctuated between Rs 1,566.58 and Rs 1,080.90. The average share price during the quarter was Rs 1,288.14. On Monday, the scrip closed 0.22 per cent down, at Rs 1,713.70.
The promoters of RIL, led by Mukesh Ambani, hold 49.03 per cent stake, with voting rights. In the third quarter ended December, Ambani had increased his stake to this level through conversion of 120 million preferential warrants into equity shares, which cost Rs 15,000 crore (Rs 150 billion).