Tube Investments to raise funds from Azim Premji Trust, SBI MF; stock up 5%

The company has agreed to raise Rs 350 crore on a private placement basis via preferential allotment to Azim Premji Trust and two schemes of SBI Mutual Fund (MF)

Shares of Tube Investments of India were up 5 per cent at Rs 850 on the National Stock Exchange (NSE) in the early morning trade on Friday after the company agreed to raise Rs 350 crore on a private placement basis via preferential allotment to Azim Premji Trust and two schemes of SBI Mutual Fund (MF).

"The company has executed the share subscription agreement on Thursday, November 26, 2020 with Azim Premji Trust for issue and allotment of 2.73 million equity shares for an aggregate consideration up to approximately Rs 200 crore and with SBI Mutual Fund for issue and allotment of 2.05 million equity shares of the company for an aggregate up to approximately Rs 150 crore," the company said in a regulatory filing. READ HERE

The transactions have taken place at a price of Rs 731.7 per share and entail additional equity issue of 4.78 million shares i.e. equity dilution of around 2.5 per cent over current issued share capital of 188 million shares. The transactions value the company at Rs 14,000 crore i.e. 9 per cent lower than Thursday's closing price. Brokerage firm ICICI Securities believe TII could utilise the funds raised towards acquisition opportunities.

Meanwhile, on November 16, 2020, Smallcap World Fund Inc purchased 2.36 million shares, representing 1.3 per cent of total equity of TII, at price of Rs 841 per share. HDFC Mutual Small Cap Fund sold 2.35 million shares for Rs 198 crore on the NSE via bulk deal, the exchange data show.

At 09:55 am, the stock of TII was trading 2 per cent higher at Rs 828 on the NSE as compared to a 0.04-per cent decline in the Nifty50 index. A combined 72,000 equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.