What dark secrets lie behind The Searle Company’s desperate pursuit of Rs4.25bn through a mysterious rights issue?

The Searle Company Limited has announced that it plans to raise Rs4.25 billion through a rights issue of 121.4 million shares at a price of Rs35 per share. The company will issue ordinary shares at a price inclusive of a premium of Rs25 per share. The funds raised will be used to expand the company’s portfolio by investing in an associated company and to improve its capital structure, profitability and financial ratios. The company is engaged in the manufacture and sale of pharmaceutical, consumer health and nutritional products and is owned by International Brands (Private) Limited, which holds a 56.32% shareholding in the company. The right issue is being carried out at a premium, which is justified due to the current market price of the company, and is in line with market practice. At the time of filing, the shares of SEARL were being traded at Rs46.32, down by Rs1.72 or 3.58%.

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