Shares of Cholamandalam Investment and Finance Company witnessed choppy trade on Friday after the non-banking financial corporation (NBFC) announced the launch of its qualified institutional placement (QIP) issue, at a floor price of ₹1,200.51 per equity share. The issue price has been fixed at a discount of 1.5% to Thursday’s closing price of ₹1,219.55 on the BSE. The Murugappa Group-backed NBFC did not reveal the total issue size of the issue, but reports suggest it would raise up to ₹2,000 crore via the equity component of the QIP, and another ₹2,000 crore via the issuance of compulsorily convertible debentures (CCDs).
In an exchange filing on August 1, 2023, the NBFC arm of Murugappa Group had announced its board approved issue of equity shares and convertible securities by way of qualified institutions placement to eligible qualified institutional buyers up to an amount not exceeding 4,000 crore in one or more tranches.
Following the announcement, Chola Investment shares opened 2% higher at ₹1,245 against the previous closing price of ₹1,219.55 on the BSE. However, the stock soon lost momentum and declined over 1% to hit a low of ₹1202.90, while the market capitalisation slipped to ₹99,214 crore.
The share price of Chola Investment touched its 52-week high of ₹1,249.50 in the previous amid buzz over fundraising plans. The largecap stock has risen over 85% in the calendar year 2023, rebounding from its 52-week low of ₹658 touched on January 6, 2023.
In the last one year, Chola Investment shares have delivered 66% returns, while it surged 62% in six months. In the last one month, the counter added 10%, while it rose 2% in a week.
In a late evening release on Thursday, Chola Investment said the committee of the board of directors of the company on October 4, 2023, will consider and approve the issue price of the equity shares and CCDs for the securities to be allotted to qualified institutional buyers.
Chola Investment on September 28 launched a QIP of equity shares of face value ₹2 each and compulsorily convertible debentures (CCD) of face value of ₹1,00,000 each. The board of director of the company "approved the floor price for the issue" and “authorised the opening of the issue today, i.e. September 28, 2023”, it said in the filing.
“The ‘relevant date’ for the purpose of the issue is September 28, 2023. It may be noted that in respect of CCDs, the company has decided that relevant date shall be the date of the meeting of the committee of directors of the company to open the issue in terms of Regulation 171(b) and accordingly the floor price in respect of the aforesaid Issue, based on the pricing formula as prescribed under Regulation 176(1) of the SEBI ICDR Regulations is ₹1,200.51 per Equity Share and ₹1,200.51 per equity shares to be issued on conversion of CCD,” it added.
As per the company, it may offer a discount of “not more than 5%" on the floor price calculated for the QIP issue.
The CCDs will have a face value of ₹1,00,000 apiece and each one will bear “interest at the rate of 7.50% per annum calculated on the face value of the CCD commencing from the date of Allotment and until the conversion date," it said.
“An additional interest at the rate of 2.00% per annum over and above the rate of interest of 7.50% per annum shall be applicable in case of delay in payment of interest by our Company for the delayed period,” it added.
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