TII to raise money from Azim Premji, SBI MF to acquire CG Power, fund capex

TII will raise Rs 350 crore from Azim Premji Trust and SBI Mutual fund through preferential issue

The Rs 38,000 crore Murugappa Group's Tube Investments of India (TII) has said the proposed fund raising of Rs 350 crore from Azim Premji Trust and SBI Mutual Fund through the preferential issue is to fund its organic and inorganic growth plans. The plans include funding the acquisition of CG Power and Industrial Solutions and the company's proposed capex.

The shares will be allotted on a preferential/ private placement basis to non-promoter entities. Azim Premji Trust will be alloted 2,733,360 equity shares, each fully paid at Rs 731.70 and inclusive of a premium of Rs 730.70 per equity share. The total investment would be around Rs 200 crore.

The SBI-focused equity fund will be alloted 1,503,348 equity shares, each fully paid at Rs 731.70 and inclusive of a premium of Rs 730.70 per equity share, aggregating to Rs 109.99 crore and for SBI Magnum mid-cap fund, 546,672 equity shares, each fully paid at Rs 731.70 and inclusive of a premium of Rs 730.70 per equity share, aggregating to Rs 39.99 crore.

Post the issue Azim Premji Trust will hold 1.42 pe cent, while SBI Focussed Equity Fund's stake will go up to 2.34 per cent from 1.60 per cent and SBI Magnum Midcap Fund's will hold 0.28 per cent.

The fund raising will fund company's organic and inorganic growth plans including for part funding the proposed acquisition of CG Power and Industrial Solutions Limited which is currently ongoing, for the company’s capital expenditure; and for general corporate purpose, said the company, which called for an EGM to get shareholders approval for the proposed fund raising, according to the management notice to the shareholders.

TII has acquired a controlling interest and holds 50.62 in CG Power, which became a subsidiary of TII with effect from November 26, 2020. TII has been classified as the ‘promoter’ of the CG Power and the board of directors of CG Power has been reconstituted pursuant to the terms of the subscription agreement.

The TII board at its meeting held on November 4, 2020, had approved the issue of corporate guarantees in favour of the proposed lenders of CG Power of up to Rs 1,400 crore and this forms part of the aggregate amount of Rs 1,760 crore.