Piramal Enterprises on Friday said its board has approved raising of Rs 5,400 crore through a rights issue and preferential allotment of compulsory convertible debentures (CCDs).
"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 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 to raise 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 dpt et placement du Qubec (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 is a validation of the robustness of the company's business model and long-term growth trajectory," Piramal Enterprises Chairman Ajay Piramal said.
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These funds will strengthen 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 USD 175 million (around Rs 1,240 crore) out of the total issue size of USD 750 million, (over Rs 5,320 crore), Piramal Enterprises said.
Additionally, CDPQ's real estate subsidiary, Ivanho Cambridge, has committed USD 250 million (over Rs 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 per cent in the company represents highest effective promoter holding amongst major financial institutions in India," Piramal Enterprises said.
Shares of Piramal enterprises were trading at Rs 1,483.55 per scrip on BSE, down 13.93 per cent from its previous close.