Piramal Enterprises on December 25 said it will raise up to Rs 2,750 crore by issuing bonds on a private placement basis in one or more tranches from time to time.
A meeting of the Administrative Committee of the Board of Directors of the Company is scheduled on Saturday, 28th December 2019, to consider and approve the issue of secured non-convertible debentures on private placement basis.
The Piramal enterprise group has continued to suffer from financial stress due to the sluggish trend in the lending sector – the real estate.
In order to tide over liquidity conditions, the company has undertaken fundraising exercise.
Recently, Piramal Enterprises raised Rs 1,750 crore through preferential allotment of compulsory convertible debentures (CCDs) to Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ).
The compulsory conversion of CCDs into equity shares will take place within 18 months from the date of allotment.
This infusion of funds will strengthen our balance sheet and also enable it to tap both organic and inorganic growth opportunities that continue to emerge in the current market dynamics across the sectors.
It may be recalled that the global rating agency Moody’s recently downgraded Macrotech (formerly Lodha Developers) to junk status for diversion of home buyers money and multiple finances of the same properties.
Piramal Enterprises has a big exposure to the Lodha Group.
Last year, during the investor concall, Piramal Enterprises acknowledged of having exposure to Lodha Group.
According to the concall, the company’s exposure stood at Rs.4,300 crores to the Lodha Group.
This amount was spread over six deals over several projects of Lodha.
Piramal confirmed the receiving of the entire amount of interest and principal.
It also claimed that most of its loan are standard, and reported that more than 90% of loans with Lodha are prepaid for more than 12-months in advance.
Net net we believe additional fresh liquidity will help the company in the longer term although in the near term industry headwinds continue to be challenging.
Therefore a strong industry recovery in real estate looks possible only over the next 18 months and near term earnings of most of the real estate players including Piramal Enterprises may see underperformance.
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