Piramal Enterprises to raise Rs5,000 crore through QIP
Mumbai: Ajay Piramal-led Piramal Enterprises Ltd on Thursday announced a qualified institutional placement (QIP) to raise up to Rs5,000 crore.
A QIP is a capital-raising tool through which listed companies can sell shares, fully and partly convertible debentures, and any securities other than warrants that are convertible into stocks to a qualified institutional buyer.
The firm will issue compulsorily convertible debentures (CCD) with a face value of Rs1,07,600 each, with a maturity period of 18 months from the date of offering, the company said in a stock exchange filing. Each CCD will be convertible into 40 equity shares, it added.
The company intends to use funds for both organic and inorganic growth opportunities in the financial services business.
“Our company intends to deploy a portion of the net proceeds to capitalize on organic and inorganic opportunities in financial services business including corporate lending, planned retail housing finance business, and acquisition and resolution of stressed assets by participating through distressed assets platform,” the company said in its QIP prospectus filed with the stock exchanges.
Additionally, Piramal Enterprises intends to deploy a portion of the proceeds for expansion of any other business vertical by way of acquisition, mergers, joint ventures or any other strategic investment depending on the organic and inorganic growth opportunities of its business, repayment of debt and investment in subsidiaries, it added.
Piramal Enterprises has appointed investment banks Kotak Mahindra Capital Co. Ltd, Citigroup Global Markets India Pvt. Ltd, Morgan Stanley India Co. Pvt. Ltd, and Motilal Oswal Investment Advisors Ltd to manage the QIP offering. The firm said that in view of further fund raising requirements, it plans to raise up to Rs2,000 crore through a rights issue.
The company’s board on Thursday also approved the merger of three of its financial services businesses.
According to the filing, the company intends to merge Piramal Finance Ltd and Piramal Capital Ltd with Piramal Housing Finance Ltd.
“The merger will reduce and broaden the risk profile; leading to efficiency in use of capital for the business; facilitate rapid expansion of the retail housing finance business; bring greater management and operational efficiency and bring about simplification of group structure,” the filing said.
Piramal Finance is the largest of the three businesses with a net worth of Rs3,382 crore and a turnover of Rs1,463 crore as of 31 March.
The merger is subject to various regulatory approvals, the filing added.
On Thursday, shares of Piramal Enterprises closed at Rs2,740.80, down by 0.2% on BSE, while the benchmark Sensex closed at 32,182.22, up by 1.09%. The company announcement came after market hours.