Competition Commission of India on Tuesday approved subscription of compulsorily convertible debentures (CCDs) of Piramal Enterprises by Canadian institutional investor, Caisse de depot et placement du Quebec (CDPQ). Following the subscription of CCDs, equity shareholding of CDPQ in Piramal Enterprises will increase to 8.99 per cent from current level of 3.68 per cent.
As per the rule, a company issues compulsorily convertible debentures to its existing members, provided that such CCDs necessarily convert into equity within a point not exceeding ten years from the date of its issue.
"The proposed combination entails subscription of CCDs of Piramal Enterprises by CDPQ, which upon conversion would result in increase in equity shareholding of CDPQ in Piramal Enterprises from 3.68 per cent to 8.99 per cent," Competition Commission of India (CCI) said in its order.
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CDPQ is a Canadian institutional fund that manages and serves more than 40 depositors, which comprises public and private pension and insurance funds in Quebec, Canada. It has been a long-standing partnership with Piramal Enterprises. It had participated as the anchor investor during its previous capital issuance, investing USD 175 million (around Rs 1,240 crore) out of the total issue size of USD 750 million (over Rs 5,320 crore).
Earlier in October, the board of Piramal Enterprises had approved raising of Rs 5,400 crore through a rights issue and preferential allotment of CCDs. The company intended to use funds for strengthening its balance sheet, insulating it against any external shocks and enabling it to tap organic and inorganic opportunities arising out of market consolidation across our financial services, pharmaceuticals and information management businesses, Piramal Enterprises Chairman Ajay Piramal had said.
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"The rights issue of Rs 3,650 crore at Rs 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," Piramal Enterprises said in a filing to the BSE.
"In addition, the company plans to raise Rs 1,750 crore through the preferential allotment of CCDs at a conversion price of Rs 1,510 per share to Caisse de depot et placement du Quebec," Piramal Enterprises had said.
Meanwhile, Piramal Enterprises has closed Tuesday's trade at Rs 1,609.85 apiece, down 2.31 per cent on the BSE.
Edited by Chitranjan Kumar