Many retail investors who bought the stock through the unlisted market said they are staring at losses to the tune of 60% 
Special 
Many retail investors who bought the stock through the unlisted market said they are staring at losses to the tune of 60% Many retail investors were left in a shock on Friday when country's leading retailer Reliance Retail, a subsidiary of Mukesh Ambani-led Reliance Industries Ltd, announced reduction in share capital at a payout of Rs 1,362 per share.
Many retail investors who bought the stock through the unlisted market said they are staring at losses to the tune of 60%. The grey market is a place where shares of a company are bought and sold outside the official trading channels. An investor willing to trade in the grey market needs to find a local dealer who will help find the buyers and sellers.
Some Twitter users said they bought the shares at Rs 3,400 per share while some others said the grey market is the stomping ground of HNIs and retail investors should curb their greed and trade only in the equity markets.
"If you hold unlisted shares in grey market, this will happen. No protection whatsoever," said a Twitter user.
"A costly lesson for people who paid higher amounts, to be careful," quipped another Twitter user.
"Buying from Unlisted Market is always a worrisome affair. Most of the times the shares are available at huge premium. There is lack of liquidity & open market to sell at the intended timeframe," said another person on the microblogging platform.
"Wow. Always found Reliance Retail way too overvalued.
Though I made money in Reliance Retail 2 years back but was wise enough to sell when valuations reached astronomical," said another Twitter user.
While some Twitter users asked if they can take the legal route for the sudden turn of events, others said reduction of share capital is not uncommon for an unlisted company.
"Reduction of Capital is not uncommon for an unlisted company.
Procedurally it’s subject to a special resolution passed by shareholders of the unlisted company + sanction by NCLT. Even some listed companies in past have undertaken reduction of capital," said a Twitter user.
Reliance Retail on Friday said it will reduce the equity share capital to the extent held by shareholders other than its promoter and holding company.
The board of Reliance Retail, on July 4, 2023, approved the proposal in which shares held by such shareholders shall stand cancelled and extinguished as per the capital reduction plan.
''A consideration of Rs 1,362 per share, determined on the basis of valuation obtained from two reputed independent registered valuers, shall be paid towards the capital reduction,'' said an exchange filing by its parent firm Reliance Industries.
This capital reduction plan will make Reliance Retail a 100 per cent subsidiary of Reliance Retail Ventures Limited (RRVL) and through this, it will be able to more efficiently structure businesses.
RRVL, the promoter and the holding company of Reliance Retail, holds 99.91 per cent of the share capital of the company.
While 0.09 per cent, around 78.65 lakh equity shares, are held by the identified shareholders.
Reliance Retail will be sending a notice to its shareholders for this capital reduction.
However, it also added this capital reduction shall be subject to regulatory approvals and also by members of the company by way of special resolution and obtaining the sanction from the National Company Law Tribunal, Mumbai bench.
Reliance Retail has been valued at $92-96 billion by two global consultants, a source with direct knowledge of the matter told Reuters.
Reliance had appointed independent valuers EY, which valued the company at $96.14 billion, and BDO, which priced it at around $92 billion, the source said, declining to be named as the details are confidential.
Ernst & Young had valued Rs 884.03 per share, while BDO Valuation Advisory LLP has put the price of Rs 849.08 per share.
Reliance Retail is fully owned by Reliance Retail Ventures, which also houses other retail operations such as international partnerships and the billionaire's consumer goods business.
The valuations show consultants estimate Ambani's businesses are growing fast. In 2020, Reliance Retail Ventures raised Rs 47,265 crore by selling a 10.09% stake, valuing it at roughly $57 billion based on current exchange rates.
Investors at the time included KKR, the Saudi Public Investment Fund, General Atlantic and the UAE's Mubadala.
Reliance Retail has in recent years partnered with a slew of global brands to launch and expand their presence in India. From fashion to food, its partner brands include Burberry, Pret A Manger and Tiffany.
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