New Delhi: On October 5, Bajaj Finance disclosed plans to raise Rs 10,000 crore through a qualified institution placement and a preferential share issuance. The NBFC intends to raise up to Rs 8,800 crore through a QIP and Rs 1,200 crore through a preferential allocation to promote Bajaj Finserv.
According to the exchange filing, Bajaj Finance will call an Extra Ordinary General Meeting to ask shareholders for consent to the proposed QIP and the Preferential Issue. However, no schedule for the EGM above has been provided.
After being converted into equity, those preferred warrants will increase Bajaj FInserv’s ownership stake in Bajaj Finance from 52.45 percent to 52.57 percent. Later, the issue price for the same will be decided.
Before this, hello entrepreneurs had reported that Bajaj Finance intended to raise money through preferential or QIP issues.
Through a preferential sale of up to 15.5 lakh warrants convertible into an equivalent number of equity shares to its promoter business, Bajaj Finserv, the company would raise Rs 1,200 crore.
Preferential warrants will be converted into equity, increasing Bajaj Finserv’s ownership stake in Bajaj Finance from 52.45 percent to 52.57 percent. However, the issue price will be decided later on.
To give promoter Bajaj Finserv a preference, the business will issue 15,50,000 warrants, which may be converted into an equivalent number of shares. Within 18 months following the allocation date, the warrants may be converted into equity shares.
According to a press statement from the firm, Bajaj Finance will receive 25% of the entire consideration from the parent at the time of subscription and warrant allocation. The warrants will expire if the option to convert them into equity shares is not exercised.
Bajaj Finance announced that new loans booked during the third quarter of 2018 increased by 26% to 85.3 lakh from 67.6 lakh.
Assets Under Management (AUM) for the firm increased by 33% to close to Rs 2.9 lakh billion. The firm has not had better AUM growth in the previous four years.
The business had previously funded Rs 1,195 crore in September through the distribution of 7.85 percent secured redeemable Non-Convertible Debentures (NCDs). Additionally, it had raised about Rs 1,700 crore through NCDs in May.
Bajaj Finserv’s shares closed the day up 0.7 percent, while those of Bajaj Finance was little changed at Rs 7,845.
Despite having significant cash buffers, the business still needs to disclose the rationale for the large-scale capital raise, but experts believe it is to prepare for potential competition from Jio Financial’s debut.
Shares of the business closed flat in trade on the National Stock Exchange at Rs 7,850.90 before the announcement of the funding.