Piramal Enterprises Limited (PEL) said that its Board, at its meeting held today, 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 intended to give an opportunity to all existing shareholders to participate in the capital raised at an attractive price, according to Ajay Piramal, Chairman, PEL. He added that the promoters will participate in and are committed to the success of the rights issue.
In addition, the company 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 dépôt et placement du Québec (CDPQ). The preferential allotment will take place by November 2019-end and the rights is expected to be completed by February 2020-end.
Piramal said the funds would further strengthen the company's balance sheet, and fortify and insulate it against any external shocks to the financial system in the future. He said that it will also enable the firm to tap organic and inorganic opportunities arising out of market consolidation across its financial services, pharma and information management businesses.
CDPQ has a long-standing partnership with PEL. It was the anchor investor during PEL’s previous capital issuance, putting in $175 million out of the total issue size of $750 million. Additionally, CDPQ’s real estate subsidiary, Ivanhoé Cambridge, has committed $250 million towards a co-investment platform with PEL to provide long-term equity to blue-chip residential developers.
PEL's promoters have been increasing their stake in the company since 1988. The current promoter holding of 46 per cent in the Company represents highest effective promoter holding among major financial institutions in India.