Titagarh Rail Systems Ltd, formerly known as Titagarh Wagons, said that its board has approved a proposal to raise Rs 288.80 crore through preferential allotment of shares to Smallcap World Fund Inc.

Following the completion of the share allotment, the investor will hold roughly 5.98 per cent stake in the wagon maker.

In a regulatory filing, the company said the board, at its meeting held on Saturday, considered and approved the raising of funds through the issuance of up to 76 lakh equity shares of the face value of Rs 2 each to Smallcap World Fund Inc, a part of Capital Group and one of the largest financial investors, on a preferential basis.

The shares will be issued at a rate of Rs 380 per share, as compared to the floor price of Rs 347.68 a piece.

Notably, Titagarh Rail Systems, in partnership with Ramkrishna Forgings, is in the process of setting up a train wheel manufacturing plant.

The company has also secured an order for 80 train sets from Indian Railways, in collaboration with BHEL.