Piramal Enterprises share surges over 5% on plans to raise fund

Shares of Piramal Enterprises jumped over 5 per cent in intraday trade on the Bombay Stock Exchange (BSE) on Wednesday as the company planned to raise Rs 1,750 crore by issuing compulsorily convertible debentures (CCDs).

On October 25, the company's board had approved raising of funds up to Rs 5,400 crore through a rights issue and preferential allotment of CCDs, subjected to regulatory approvals. In addition, the company said it had entered into a securities subscription agreement with a Canadian investor, Caisse de depot et placement du Quebec, for raising Rs 1,750 crore.

"The company plans to raise around 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 investor, Caisse de depot et placement du Quebec (CDPQ)," Piramal Enterprises said in a filing to the Bombay Stock Exchange.

The preferential allotment will take place by November end and the rights issue is expected to be completed by end February 2020.

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Boosted by the development, Piramal Enterprises share price gained as much as 5.04 per cent to hit an intraday high of Rs 1,750 on the BSE, after opening higher at Rs 1,676 against previous close level of Rs 1,666.

In a similar trend, stocks of Piramal Enterprises were trading 1.93 per cent higher at Rs 1,697.95 after opening tad at Rs 1,666.15 on the National Stock Exchange (NSE). In the opening deal, the stock hit an intraday high of Rs 1,750.

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CDPQ, an institutional investor, has a long-standing partnership with Piramal Enterprises (PEL). It had participated as the anchor investor during PEL's previous capital issuance, investing $ 175 million out of the total issue size of $750 million. Additionally, CDPQ's real estate subsidiary, Ivanhoe Cambridge, has committed $250 million towards a co-investment platform with PEL to provide long-term equity to blue-chip residential developers.

"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. "This transaction further demonstrates CDPQ's commitment to invest in India over the long run."

Commenting on the development, Ajay Piramal, Chairman, Piramal Enterprises said, "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."

Edited by Chitranjan Kumar