HYDERABAD: Piramal Enterprises Ltd (PEL) on Friday said its board has approved fresh capital raise of Rs 5,400 crore through a rights issue and preferential allotment of compulsory convertible debentures (CCDs). The rights issue of Rs 3,650 crore at Rs 1,300 per share, is expected to give existing shareholders an opportunity to participate in the capital raised at an attractive price, according to Ajay Piramal, chairman, PEL. He added the promoters will participate in and are committed to the success of the rights issue. Interestingly, the promoters have been steadily raising their stake in the company and currently hold about 46 per cent.
However, traders didn’t take it kindly and shares plunged as much as 15 per cent intra-day Friday on BSE. The scrip saw a spurt in volume by more than 3.38 times and eventually closed at Rs 1,590.40 or about eight per cent lower than its previous close of Rs 1,723 per share. According to Piramal, the proposed money would help strengthen the company’s balance sheet, fortify and insulate it against any external shocks to the financial system in future. He added the move will also enable the management to tap organic and inorganic growth opportunities arising out of market consolidation across its financial services, pharma and information management businesses.
Besides the rights issue, Piramal also has plans to raise Rs 1,750 crore through the preferential allotment of CCDs (at a conversion price of Rs 1,510 a share) to Canadian institutional investor Caisse de depot et placement du Quebec (CDPQ). The preferential allotment will take place by the end of next month and the rights is expected to be completed by end of February 2020.
It may be noted that CDPQ’s association with the company dates back to several years, when it started its journey as an anchor investor during PEL’s previous capital issuance. Of the total issue size of USD 759 million, CDPQ alone accounted for over USD 175 million. Besides, CDPQ’s real estate subsidiary, Ivanhoe Cambridge also invested another USD 250 million towards a co-investment platform with PEL to provide long-term equity to blue-chip residential developers.
Shares plunge as much as 15 per cent
Traders didn’t take it kindly and shares plunged 15 per cent intra-day on BSE. The scrip saw a spurt in volume by over 3.38 times and closed at J1,590.40