McNally shares surge 20 % as EMC acquires stake

Capital infusion of Rs 100 cr by the company will be done through a preferential allotment of 10 million shares to EMC Ltd at a price of Rs 100 per share

Shares McNally Bharat Engineering today surged as much as 19.97% on Bombay Stock Exchange (BSE) to close at Rs 94.90 after the company announced that it would raise Rs 100 crore equity capital from EMC Ltd at Rs 100 per share, 26.42% higher than its Tuesday's closing price.

This capital infusion of Rs 100 crore by the company will be done through a preferential allotment of 10 million shares to EMC Ltd at a price of Rs 100 per share. "The proceeds of this equity capital raise to meet its working capital requirements and this expedite execution of the various projects in hand," the company said in a statement.

EMC Ltd, a service provider for power transmission and distribution firms, had earlier invested Rs 50 crore in March 2015 in McNally through its group company MKN Investment for a 12.5% stake in the company. Following this fresh round of proposed preferential allotment EMC's stake in McNally will go up to 29.64%.

"As per the Sebi guideline, there will also be an open offer by EMC and Willianson Magor Group (the existing promoter) for upto 26% of equity capital of the company," the statement said.

Existing promoter Kolkata-based Khaitan family's shareholding in Williamson Magor group's engineering arm is also set to come down from 29.73% above 25%. According to the investment agreement, McNally Bharat Engineering will be jointly controlled by the existing promoters and EMC Ltd. Two representatives of EMC, including managing director Manoj Toshniwal, will join the board.

"The partnership with EMC will strengthen McNally to capitalise on the large business opportunity for the company over the next 10 years and thus provide an integral engineering and construction solution to its customer in the chosen areas of competence," Aditrya Khaitan, chairman of McNally Bharat Engineering said.