Blackstone to invest Rs 5,000 crore in IIFL Finance for 16% stake as company raises Rs 6,414 crore

Kolkata: IIFL Finance board on Tuesday announced that Blackstone, the world’s largest alternative asset manager, will infuse $535 million, or Rs 5,000 crore in Indian currency as primary equity in the company for about 16% fully diluted stake.

This is part of a total equity raising of Rs 6,414 crore by the Nirmal Jain-promoted non-banking financial company. Jain and co-promoter R Venkataraman will invest Rs 1264 crore through warrants.

Anchorage Capital, promoted by Mumbai-based investor Rohit Kothari, will join the deal with Rs 150 crores investment.


IIFL Finance and its promoters have on Tuesday inked a definitive agreement with Blackstone and Anchorage Capital in this regard.


"This partnership is about more than capital. Blackstone brings deep experience in building market-leading businesses in India, strong governance discipline, and a global perspective," Jain said.

"The investment strengthens our balance sheet and gives us the headroom to scale our franchises, invest further in technology, and deepen our co-lending partnerships with banks, while staying disciplined on risk and capital,” he added.

ET in its edition dated November 10 wrote that Blackstone would invest Rs 5000 crore in IIFL Finance, while Anchorage Capital and the promoters would also join in this investment round .

The deal was concluded after months of intense deliberations. Initially, Blackstone began discussions with Fairfax which was looking to exit its 13% holding in IIFL Finance. American private equity firm Advent International Corp and Singapore's Temasek Holdings had also shown interest at that stage. Later, the talks started evolving around primary equity infusion instead of a stake buy from Fairfax, people aware said. Advent remained in the fray till the last stage, they said.

The investment will raise the lender's capital adequacy ratio to about 30% from 17% and support the next phase of growth across its secured lending businesses. This could improve credit ratings of the company and subsequently may lower the borrowing costs.

Blackstone will invest through a preferential allotment of compulsorily convertible preference shares, which will convert into equity shares at Rs 602 per share within 18 months of allotment.

IIFL Finance's share price closed Monday at Rs 627.05 on BSE, rising about 36% over the past six months.

The company will hold an extra-ordinary general meeting on December 4 to seek shareholders' approval for the transaction, alongwith redesignation of R Venkataraman from joint managing director to non-executive non-independent director.