Piramal set to raise ₹7,000 cr by March
MUMBAI: Pi ram al Enterprises Ltd (PEL) plans to raise about ₹7,000 crore through a qualified institutional p lace ment(QIP) and rights issue by March end, the firm said on Wednesday. It will utilise the proceeds mainly to strengthen its financial services business.
The ₹4,996.2 crore QIP is being issued in the form of compulsory convertible debentures (CCDs), the first such transaction by an Indian firm. “PEL decided to issue CCDs as we did not want to dilute equity in one go. The debt will convert into equity after 18 months and will lead to about 10% equity dilution,” said Ajay Piramal, chairman Piramal Group and Shriram Group at a press conference.
Piramal also said that the investors can convert their debt into equity at any point of time. “The coupon on the debentures is about 7.9%,” he said. PEL has approved a conversion price of ₹2,690 per share.
The company is also raising about ₹2,000 crore through a rights issue. “We also want our existing shareholders to be apart of our growth story. We have underwritten 90% of the issue which shows our confidence in the business,” Piramal said.
During the current fiscal, part of the proceeds will be utilised for a recently launched housing finance company and stressed asset fund that P EL has launched in partnership with credit specialist firm Bain Capital Credit.
“About ₹1,000 crore will be invested in the HFC. $100 million will go towards the stressed asset fund,” Piramal said.
Piramal Finance, the nonbanking financial company of Piramal Group, received a licence for housing finance business in September.
In August last year, PEL and Bain signed a memorandum of understanding to invest in stressed assets in India. Piramal group has applied for an asset reconstruction company licence as well and is awaiting approval from the Reserve Bank of India.
PEL will be exploring acquisition opportunities in pharmaceutical space as well.
For the QIP, nearly 50% of investors are from North America, 35% from Asia and 15% from Europe .“We have received interests from large global funds, especially pension funds f or theQIP ,” Piramal said. The issue is expected to close on October 25.