Bajaj Finance plans to raise Rs 1,800 crore via QIP & preferntial issue to promoter

MUMBAI: Bajaj Finance is planning to raise around Rs 1,800 crore from institutional investors and its promoter, Bajaj Finserv, to boost the non-bank finance company’s capital base as it sees opportunities to expand its loan business.

Its board has cleared a proposal to raise Rs 1,400 crore from qualified institutional investors (QIP) and issue 925,000 preferential shares to Bajaj Finserv, the company said in a filing with stock exchanges.

Shares of the finance company closed 4.25% lower at Rs 4,365.2 on Tuesday on the Bombay Stock Exchange, where the benchmark Sensex fell 0.75%.

If the preferential shares are issued at Tuesday’s closing price, Bajaj Finserv would have to invest more than Rs 400 crore in the unit.

Bajaj Finserv owns 61.6% of Bajaj Finance and subscribing to the preferential shares will enable it to maintain the holding even after the institutional placement of shares.

“The money raised from promoters and the QIP route will take care of our capital needs over the next three to four years based on the internal growth plans,” said Rajeev Jain, managing director of Bajaj Finance. He said the board’s decision would allow the company to raise the money over the next 12 to 18 months.

Headquartered in Pune, Bajaj Finance specialises in providing loans to buy two-wheelers and three-wheelers. It also offers personal finance, consumer loans, and loan against property. Bajaj Housing Finance, a subsidiary of Bajaj Finance, recently approached housing finance regulator National Housing Bank for a housing finance company licence.

Just like a bank that has to maintain a minimum capital to lend, a finance company also has to maintain capital. Bajaj Finance’s capital adequacy ratio (CAR) was 18.6% at the end of the December quarter.

After the QIP and preferential allotment, the ratio would increase to 21% against the minimum 15% prescribed by the Reserve Bank of India.

In the December quarter, the company had reported a net profit of Rs 258 crore and had Rs 30,822 crore of assets under management.