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Piramal Plunges Most in 7 Years After $770 Million Capital Raise

The company’s shares sank as much as 17% in Mumbai trading, the biggest drop since 2012, after the capital raising was announced.

Piramal Plunges Most in 7 Years After $770 Million Capital Raise
Billionaire Ajay Piramal, chairman of Piramal Group, speaks during an interview in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

(Bloomberg) -- Piramal Enterprises Ltd., the drugs-to-real-estate group controlled by Indian billionaire Ajay Piramal, raised about $770 million in a sale of rights and debentures to shore up its finances. The shares fell by the most in seven years.

The group plans to raise 36.5 billion rupees ($514 million) of the amount through a rights issue priced at 1,300 rupees a share, the Mumbai-based group said Friday in a statement. That’s about 25% less than the stock’s closing price Thursday in Mumbai.

The group is raising capital at a time when many of the country’s biggest billionaire-controlled conglomerates are also selling assets and raising cash, just as banks are reining in lending to improve their balance sheets. The capital raised through the sale to Caisse de Dépôt et Placement du Québec will “insulate us against any external shocks to the financial system in the future,” Piramal, the group’s chairman, said in the statement.

The sale to CDPQ, as the Canadian pension fund is known, included a preferential allotment of compulsory convertible debentures to take place by the end of next month, according to the statement. The rights issue is expected to be completed by the end of February.

The company’s shares sank as much as 17% in Mumbai trading, the biggest drop since 2012, after the capital raising was announced.

To contact the reporters on this story: P R Sanjai in Mumbai at psanjai@bloomberg.net;Baiju Kalesh in Mumbai at bkalesh@bloomberg.net

To contact the editors responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net, Dave McCombs, Jeanette Rodrigues

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