Piramal Enterprises to raise Rs 5,400 crore

Piramal Enterprises tanked 15 percent intraday on October 25after the pharma company approved fresh capital raise of Rs 5,400 crore ($770million) through a rights issue and preferential allotment of CompulsoryConvertible Debentures (CCDs).

The rights issue of Rs 3,650 crore at Rs 1,300 per share isintended to give an opportunity to all shareholders to participate in raisingcapital at an attractive price. The promoters will participate and are committedto the success of the rights issue, the company said in a release to BSE.

In addition, the company plans to raise Rs 1,750 crore ($250 million) through the preferential allotment of CCDs (at a conversion price of Rs 1,510 per share) to Canadian institutional investors, Caisse de depot et placement du Québec.

The preferential allotment will take place by November-endand the rights issue is expected to be completed by end of February 2020, thecircular said.

The company will issue Rs 3,650 crore worth of equity shares issued at Rs 1,300 per share to existing shareholders, which is at nearly 25 percent discount to Rs 1,723.50, the closing price on October 24.

"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 Rights Issue. As promoter family, we remain fully committed and would like to further increase our investment in the Company," said Ajay Piramal, Chairman, Piramal Enterprises.

"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." The stock witnessed spurt in volume by more than 1.13 times and saw a fall in share price to the tune of 40 percent in the last six months.