Piramal Enterprises declined 7.73% to end at 1590.40 after the company said its board approved raising fresh capital of Rs 5,400 crore through a rights issue and preferential allotment of compulsory convertible debentures.
Piramal Enterprises said the rights issue of Rs 3,650 crore at Rs 1,300 per share, is intended to give an opportunity to all its existing shareholders to participate in the capital raiseat an attractive price. The promoters will participate and are committed to the success of the Rights Issue. In addition, the company plans to raise about Rs 1,750 crore through the preferential allotment of CCDs (at a conversion price of Rs 1,510 per share) to Canadian institutional investor, Caisse de d et placement du Quec (CDPQ). The preferential allotment will take place by end November 2019 and the Rights Issue is expected to be completed by end February 2020.Ajay Piramal, Chairman, Piramal Enterprises said, This fresh equity infusion from CDPQ, an existing global, marquee, long-term investor in PEL, especially in the current market scenario is a validation of the robustness of the company's business model and long-term growth trajectory. We also want to offer our existing investors,to get an equal opportunity to participate in this capital raise and benefit from the attractive price of the Right Issue. As promoter family, were main fully committed and would like to further increase our investment in the company. These funds will further strengthen our balance sheet, fortify & 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."
"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. "This transaction further demonstrates CDPQ's commitment to invest in India over the long run."
Meanwhile, the S&P BSE Sensex closed 0.1% lower at 39,152.
Shares of Piramal Enterprise rose as much as 1.07% in early trade. The fund raising announcement was made in early afternoon trade. Post the announcement, the stock tumbled as much as 17.32% to hit the day's low of Rs 1425.20. The stock pared most of its losses and closed at 1,590.40 on BSE.
On consolidated basis, Piramal Enterprises' net profit jumped 17.3% to Rs 564.25 crore on 14.6% rise in net sales to Rs 3,603.56 crore in Q2 September 2019 over Q2 September 2019.
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Piramal Enterprises (PEL) is one of India's largest diversified companies, with a presence in financial services, pharmaceuticals and healthcare insights & analytics.
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