Diversified conglomerate  Piramal Enterprises Ltd  (PEL) will raise fresh capital of ₹5,400 crore through a rights issue and preferential allotment of compulsory convertible debentures (CCDs).

Of this, ₹1,750 crore will be raised through a preferential allotment of CCDs (at a conversion price of ₹1,510 per share) to Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ). The rights issue of ₹3,650 crore, at ₹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.

“The promoters will participate in, and are committed to, the success of the rights issue,” said a company statement on Friday.

The preferential allotment will take place by November-end and the rights issue by the end of February 2020.

Selling pressure

PEL, meanwhile, came under selling pressure on the bourses after it made the fund-raise announcement.

The PEL scrip crashed by 17.3 per cent intra-day to touch a low of ₹1,425 on the BSE from its previous closing price of ₹1,723. It recovered to close 7.73 per cent lower at ₹1,590.40 apiece. Explaining the pricing, Ajay Piramal, PEL Chairman, said: “Rights is like giving existing shareholders a bonus. I am giving rights to shareholders at whatever price. The price is not important to me as there is no dilution. You as a shareholder are not diluting yourself unless you say you are not participating in the rights. But rights is attractive. So I want everybody to take the rights issue.”

‘Jittery market’

He also said that CDPQ’s investment will be converted into equity. “CDPQ has come in so people think — will this debenture be converted into equity? It is compulsorily converted. They have committed to us that they will convert,” he said. Noting that no one had raised questions in 2017 on CDPQ, he said that today’s market is “very jittery”.

 

 

 

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