CESC lines up rights issue at Rs 60 per share

RPG group company and power utility, CESC Ltd has decided to raise Rs 49.61 crore through a rights issue priced at Rs 60 per share. "The proceeds of the issue will be used to strengthen the balance-sheet of the company," explained its managing director, Sumantra Banerjee.

The company will issue 82,69,788 equity shares of Rs 10 each, at an aggregate face value of Rs 8.27 crore that will be offered for subscription for cash at a premium of Rs 50 per equity share to its shareholders at a ratio of 1 rights share for every 8 equity shares held.

This would provide shareholders scope for around 90 per cent appreciation on the value of their holding for the scrip is doing the round at Rs 116 per share at the bourses. The scrip had reached a 52 week high of Rs 157.5 a few weeks ago.

The present equity of the company stands at Rs 66 crore while the promoters hold around 42 per cent. Post issue the equity of the company is slated to rise to Rs 74.42 crore.

Meanwhile, Indian financial institutions have steadily reduced their stake in CESC in the last few months while foreign institutional investors have jacked up their stake by as much as 11.5 per cent in the last quarter.

Total foreign holding in CESC Ltd has in fact increased a large 13.5 per cent in the last few months from a small 4.48 per cent to 17.64 per cent.

Bulk of the stake was picked up by five FII "" Platinum Asset Management Ltd, Citigroup Global Market Mauritius Pvt Ltd, Platinum Asset Management Ltd, Merrill Lynch Capital Markets and India Capital Fund at 3 per cent, 2.5 per cent, 1.12 per cent, 1.5 per cent and 1.2 per cent respectively.

Domestic institutions like Life Insurance Corporation of India, New India Assurance, and National Insurance Company have reduced their stakes by four per cent, five per cent and one per cent respectively.

The composite stake of banks, domestic financial institutions, and insurance companies have also steadily declined from 21 per cent in the first quarter to 17.5 in the second quarter. In the last few months these entities have reduced their holding to 14.41.