MUMBAI, MAY 3: Home grown auto major Mahindra & Mahindra is planning to raise Rs 700 crore by issuing fully and compulsorily convertible debentures (FCDs) to Golboot Holdings Ltd, an entity owned by global financial services major Goldman Sachs. With this investment, Golboot will own 3.68 per cent of the post-issue paid up equity share in the company

M&M will utilise the amount raised through the preferential offer for its auto and tractor business, the company said on Saturday. It will issue 93.95 lakh unsecured fully and compulsorily convertible debentures at the face value of Rs 745 each, aggregating a little over Rs 700 crore.

Each FCD which carries an interest rate of 9.25 per cent per annum would be convertible into one equity share of Rs 10 each at a price of Rs 745, including a premium of Rs 735, anytime within 18 months from the date of allotment at the option of the investor. The company would be seeking shareholders’ approval for the issue through a postal ballot.

FCDs are mandatorily convertible into equity shares on the date falling 18 months from the date of allotment. The issue price represents a premium of 7.91 per cent to the closing price of Rs 690.35 traded on the BSE on Friday. The company board, which met on Saturday, has fixed May 3 as the cut-off date for ascertaining the list of shareholders to whom postal ballot forms would be issued. The results of the postal ballot would be declared on June 11.

On the PE placement, M&M vice-chairman Anand Mahindra said, “Under inflationary pressures, efficient competitors leverage their position and lead. Private equity players bring in strategic knowledge and their competencies can help us”. He also pointed out that the company is looking out for acquisition opportunities, both inside and outside the country.

Mahindra, who recently bought American and European auto components firms, tied up with Indian private equity firm ICICI Ventures earlier this month to buy Italian gear maker Metalcastello for an undisclosed sum.