Piramal to raise ₹5,400 cr, CDPQ to invest ₹1,750 cr
NEW DELHI: Piramal Enterprises Ltd, the drugs-to-real-estate group controlled by Indian billionaire Ajay Piramal, on Friday said its board has approved raising of ₹5,400 crore through a rights issue and preferential allotment of compulsory convertible debentures (CCDS).
“The rights issue of ₹3,650 crore at ₹1,300 per share, is intended to give an opportunity to all its existing shareholders to participate in the capital raise at an attractive price,” Piramal Enterprises said in a filing to BSE.
The promoters will participate in and are committed to the success of the rights issue, it added.
“In addition, the company plans t o raise ₹ 1, 750 crore through the preferential allotment of CCDS at a conversion price of ₹1,510 per share to Canadian institutional investor, Caisse de dépôt et placement du Québec (CDPQ),” Piramal Enterprises said.
The preferential allotment will take place by November this year and the rights issue is expected to be completed by February 2020, it added.
“This fresh equity infusion from CDPQ, an existing investor in Piramal Enterprises, especially in the current market scenario i s a validation of t he robustness of the company’s business model and long-term growth trajectory,” Piramal Enterprises chairman Ajay Piramal said.
The group is raising capital at a time when many of the country’s biggest billionaire-controlled conglomerates are also selling assets and raising cash, just as banks are reining in lending to improve their balance sheets.
These funds will strengthen
THE PREFERENTIAL ALLOTMENT WILL TAKE PLACE BY NOVEMBER AND THE RIGHTS ISSUE MAY BE COMPLETED BY FEBRUARY 2020
company’s balance sheet, insulate it against any external shocks and enable it to tap organic and inorganic opportunities arising out of market consolidation across our financial services, pharmaceuticals and information management businesses, he added.
“We are delighted to deepen our partnership with Piramal Enterprises, a company whose value creation approach aligns well with CDPQ’S long-term objectives and perspective as a global institutional investor,” said Anita M George, executive vice president and head of strategic partnerships, Growth Markets at CDPQ.
CDPQ has a long-standing partnership with Piramal Enterprises. It had participated as the anchor investor during its previous capital issuance, investing $175 million (around ₹1,240 crore) out of the total issue size of $750 million, (over ₹5,320 crore), Piramal Enterprises said.
Additionally, CDPQ’S real estate subsidiary, Ivanhoé Cambridge, has committed $250 million (over ₹1,770 crore) towards a co-investment platform with Piramal Enterprises to provide long-term equity to blue-chip residential developers, it added.
“Since 1988, the promoters have increased their stake in the company. Current promoter holding of 46% in the company represents highest effective promoter holding amongst major financial institutions in India,” Piramal Enterprises said.
The company’s shares sank as much as 17% in Mumbai trading, the biggest drop since 2012, after the capital raising was announced.
Shares of Piramal enterprises closes at ₹1590.40 per scrip on BSE, down -7.73% from its previous close.