India: CDPQ to invest $250m in Piramal Enterprises

Photo: Mint

Billionaire businessman Ajay Piramal-led Piramal Enterprises Ltd, which has been desperately attempting to raise money over the past six months to repay debts and support growth, on Friday, said it is going to raise 1,750 crore via a preferential allotment of shares to Canadian pension fund, Caisse de dépôt et placement du Québec (CDPQ).

The flagship listed firm of the Piramal Group of companies said it plans to raise a total of 5,400 crore of fresh capital through a mix of rights Issue and preferential allotment, of which Rs. 3,650 crore will be raised through rights issue, which is aimed to be completed by February 2020.

At present, CDPQ holds a 3.68% stake in Piramal and the preferential allotment to CDPQ will take place by November-end.

“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, in a press statement.

“This transaction further demonstrates CDPQ’s commitment to invest in India over the long run,” she added.

Each CCD will be convertible into 100 equity shares, at a conversion price of Rs.1,510 per share and will have a term of 18 months from the date of allotment, unless converted earlier by CDPQ. Also, Piramal would bear an annual interest rate 9.28%, calculated on the face value of the CCDs, from the date of their allotment and until the date of their conversion. The interest will be paid to CDPQ in three half-yearly instalments, the statement said.

The firm’s board is yet to decide other terms in relation to the rights issue, including the rights entitlement ratio and record date.

Earlier, CDPQ had participated as the anchor investor during Piramal Enterprises’ capital issuance, investing $175 million out of the total issue size of $750 million. Additionally, CDPQ’s real estate subsidiary, Ivanhoé Cambridge, has committed $250 million towards a co-investment platform with Piramal to provide long-term equity to blue-chip residential developers.

The development comes amid a liquidity crunch in the market that has mainly affected the non-banking financial companies (NBFCs), especially the ones lending to the real estate sector.

“The board is in talks with SoftBank Group Corp. to raise around 7,000 crore in the group’s main financial services business– Piramal Capital and Housing Finance Ltd. (PCHFL),” two persons familiar of the matter had told Mint, requesting anonymity.

While announcing June quarter results, Piramal Enterprises said that under its financial services business (which includes PCHFL), the total loan book grew 20% year-on-year to 56,605 crore, in which wholesale residential real estate constituted 47%. The group’s housing finance loan book grew by around times year-on-year to Rs. 6,110 crores, constituting 11% of the overall loan book.

An Icra report on 25 June said PCHFL’s short-term sources of funding, albeit declining, remains high at around 20% of total debt as on 31 March, 2019 compared to about 36% as on 30 September, 2018.

This article was first published on livemint.com.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.