Piramal to raise fresh capital of Rs 5,400 crore

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Published: October 26, 2019 12:17 AM

Anita M George, executive vice-president and head of strategic partnerships, (growth markets) at CDPQ, said: “This transaction further demonstrates CDPQ’s commitment to invest in India over the long run.”

The consolidated equity (pro-forma as of September 30, 2019) of PEL post equity capital infusion will be Rs 32,000 crore, bringing the consolidated debt-equity ratio to under 1.7x.

Piramal Enterprises (PEL) will be raising fresh capital of Rs 5,400 crore ($770 million) through a rights issue and preferential allotment of compulsory convertible debentures (CCDs), the company said in a statement.

The rights issue of Rs 3,650 crore ($520 million) will be priced at Rs 1,300 per share, a discount of 24.6% to Thursday’s closing price of Rs 1,723.7 per share. The promoters will participate in the rights issue.

In addition, PEL, through a preferential allotment of CCDs to Canadian institutional investor, Caisse de dépôt et placement du Québec (CDPQ), will be raising `1,750 crore ($250 million) at a conversion price of Rs 1,510 per share. The preferential allotment will take place by the end November 2019 and the rights issue is expected to be completed by end February 2020, the company said.

Reacting to the announcement, Piramal Enterprises stock plunged 17.3% in the intra-day trade on Friday. The stock finally closed down 7.73% at Rs 1,590.4 on the BSE.

Commenting on the transaction, Ajay Piramal, chairman, PEL said, “These funds will further strengthen our balance sheet, fortify and insulate us against any external shocks to the financial system in the future as well as enable us to tap organic and inorganic opportunities arising out of market consolidation across our financial services, pharmaceuticals and information management businesses.”

This fresh equity infusion from CDPQ, Piramal said, “is a validation of the robustness of the company’s business model and long-term growth trajectory”. He added that the company through the rights issue also wants to offer its existing investors an “equal opportunity” to participate in this capital raising. “As the promoter family, we remain fully committed and would like to further increase our investment in the company,” he said.

Anita M George, executive vice-president and head of strategic partnerships, (growth markets) at CDPQ, said: “This transaction further demonstrates CDPQ’s commitment to invest in India over the long run.”

CDPQ had participated as the anchor investor during PEL’s previous capital issuance, investing $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. The consolidated equity (pro-forma as of September 30, 2019) of PEL post equity capital infusion will be Rs 32,000 crore, bringing the consolidated debt-equity ratio to under 1.7x.

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