Shriram AMC plans rights issue to raise net worth
Neena Sreedharan
MUMBAI, January 22: Shriram Asset Management Company, the investment manager to Shriram Mutual Fund, is planning to float a Rs 4-crore rights issue of optionally convertible preference shares (OCPs). The company is the only listed asset management company.The rights issue is being floated with a view to increase the net worth of the asset management company (AMC) to Rs 10 crore as per SEBI's mutual fund regulations. Currently, the company has a net worth of Rs 6.22 crore. SEBI had recently stipulated that AMCs which do not fulfill this criterion by December 1998 will not be allowed to float any new schemes. Currently, there are nine registered AMCs which are yet to increase their net worth to Rs 10 crore. The industry expects that some of them may even resort to mergers in order to attain this net worth. Shriram has drawn up plans for an income scheme, Shriram Income Guardian, with a promise of a 15-16 per cent return in the first year. However, going by SEBI's decision it seems unlikely that the
scheme will be able to get through till such time that the rights issue is successfully completed. The offer document for the issue has been filed with the SEBI. The company is offering 4 lakh 12.50 per cent OCPs of Rs 100 each for cash at par aggregating Rs 4 crore to the existing shareholders. The company has decided on a ratio of one OCP for every 15 equity shares held by the shareholders of Shriram AMC. Each OCP will have a face value of Rs 100. The OCP holder will have the option of converting the Rs 100 face value preference share into 10 equity shares of Rs 10 each after three years from the date of allotment. The company will pay a dividend of 12.5 per cent annually as on June 30. The preference shareholders are assured of a fixed rate of dividend and will have no voting rights except on issues related to the preference shares. The non-convertible preference shares (NCPs) will be redeemed by the company at par after 10 years from the date of allotment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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