Rights issue pricing puts selling pressure on Piramal Enterprises

Our Bureau Mumbai | Updated on October 25, 2019 Published on October 25, 2019


Piramal Enterprises (PEL) has come under massive selling pressure on the bourses today. Traders booked profit to subscribe to the rights issue of PEL at a later date, which is substantially lower than the prevailing market price.

The share price of PEL crashed by 17.3 per cent in intra-day trading today to touch a low of ₹1,425 on the BSE from its previous closing price of ₹1,723. Nearly 7 million PEL shares were traded on the BSE and the National Stock Exchange (NSE) till 2.49 pm. The share had witnessed some recovery and was trading at ₹1,586 post 2.30 pm.

“Rights issue of most companies are never above their prevailing market price. PEL’s rights issue is priced at ₹1,300 per share which is more than 20 per cent discount to its current market price, which is the reason that traders are selling the shares in the open market to subscribe to it at a later date,” said Kishor Ostwal, MD at Mumbai based CNI Global Research.

Read also: Piramal Enterprises to raise fresh capital of Rs 5,400 cr

PEL’s press release said that its rights issue at ₹3,650 crore at ₹1,300 per share is intended to allow all shareholders to participate in raising capital at an attractive price. The promoters will participate and are committed to the success of the rights issue, the company said in a release to BSE. Also, the company plans to raise ₹1,750 crore ($250 million) through the preferential allotment of CCDs (at a conversion price of ₹1,510 per share) to Canadian institutional investor, Caisse de dépôt et placement du Québec.

Published on October 25, 2019
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