 "Bajaj Finance to raise Rs 10,000 crore via QIP, preferential issue")
Leading non-banking financial company Bajaj Finance on Thursday received its board’s approval to raise Rs 10,000 crore capital through qualified institutions placement (QIP) and the preferential issue of shares. This will be the highest capital raising by the company, which is mainly into retail finance.
As much as Rs 8,800 crore will be raised via QIP and the remaining Rs 1,200 crore through the preferential allotment of shares to its parent, Bajaj Finserv.
This will be the fourth fundraising by the company by way of QIP in the last eight years. Last it had raised Rs 8,500 crore in November 2019, and before that, Rs 4,500 crore in September 2017 and 1,400 crore in June 2015.
According to the exchange filing on Thursday, Rs 1,200 crore will be raised by issuing 15,50,000 warrants on a preferential basis to promoter company Bajaj Finserv which can be converted to equivalent number of equity shares within a period of 18 months from the date of allotment.
Further, at the time of subscription and allotment of warrants, 25 per cent of the amount will be payable, whereas the remaining 75 per cent of the consideration will be payable on the exercise of options against each warrant.
After the conversion of preferential warrants into equity, Bajaj Finserv’s holding in Bajaj Finance will rise to 52.57 per cent from the existing 52.45 per cent. The issue price will be determined later in accordance with the applicable law, the company said.
It will hold an extraordinary general meeting seeking approval on the same from its shareholders.
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Although the company did not disclose the reason for the fundraise, analysts believe the company is raising capital for expanding its business as well as gearing up for competition, considering the entry of Jio Financial Services into the segment.
“…now that it is foraying into newer product segments such as auto, MFI, tractor, CV, the AUM growth could also be 1-2% higher than earlier expectations. What this implies is that the new equity capital raise will be predominantly deployed for growth capital,” stated a research report by Motilal Oswal.
In FY23, Bajaj Finance expanded its geographical footprint by adding 229 locations, primarily across UP, Bihar, and North-East India, taking its presence to around 3,733 locations. It plans to extend its presence in 5,000 locations over the next few years.
In January, the company announced its strategy for 2023-27 in which it articulated its ambition to be a leading payments and financial services company in India with a customer franchise of 100 million, market share of 3 per cent in payments ecosystem, and market share of 3-4 per cent of total credit as well as 4-5 per cent of retail credit in India.
Earlier this week, Bajaj Finance announced its provisional quarterly business updates with 26 per cent growth in new loans booked in the second quarter of FY24 at 8.53 million as compared to 6.76 million in Q2FY23.
The deposits book of the company stood at nearly Rs 54,800 crore as of September 30, 2023, recording 39 per cent growth from Rs 39,422 crore in the year ago period.
Further, the assets under management of the firm rose by 33 per cent to approximately Rs 2.90 trillion, as against Rs 2.18 trillion in the same quarter of FY23.