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Samvardhana Motherson has launched a QIP to raise ₹6,398.6 crore, resulting in a 5% equity dilution. The floor price is ₹188.85, 2.6% lower than the closing price. Additional funds will be raised through CCDs worth ₹2,250 crore.
Samvardhana Motherson International Ltd. has initiated a Qualified Institutional Placement (QIP) to raise ₹6,398.6 crore. The auto component manufacturer made this announcement after receiving board approval on Monday evening. This strategic move is aimed at raising funds through institutional share sales, leading to a 5% dilution of the company's total equity.
The floor price for the QIP has been set at ₹188.85, representing a 2.6% discount to the closing price of ₹193.75 on Monday. Additionally, the company reserves the right to offer a further 5% discount on the floor price at its discretion. The share sale is expected to attract strong institutional interest, helping Samvardhana Motherson raise substantial capital for its expansion and operational needs.
As of the quarter ending in June 2024, Samvardhana Motherson's gross debt stood at ₹20,114 crore, marking a 16% increase sequentially. The net debt during the same period was ₹13,370 crore, reflecting a 29% rise. The QIP is expected to ease the company’s debt burden and provide financial flexibility for future growth initiatives, such as recent acquisitions.
Alongside the QIP, Samvardhana Motherson announced its acquisition of an 11% stake in Israel-based REE Automotive for $15 million. This acquisition is aligned with the company's strategy to expand its global footprint and invest in emerging technologies, particularly in the electric vehicle sector.
In addition to the equity share sale, Samvardhana Motherson is raising funds through Compulsorily Convertible Debentures (CCDs). The CCD issuance will total ₹2,250 crore and will be available for subscription by eligible institutional investors. Each CCD is priced at ₹1 lakh, and they will mature on 20th September 2027 unless converted earlier into equity shares. The CCDs will convert into equity at a 13.83% discount to the weighted average price or floor price of ₹188.85, subject to a potential 5% discount as decided by the company.
The Samvardhana Motherson share price has gained significant momentum throughout 2024, increasing by over 80% year-to-date. On Monday, the stock closed at ₹193.75, up by 1.7%. This positive performance reflects investor confidence in the company’s growth prospects and financial strategies, including the QIP and its recent acquisition moves.
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