Bajaj Finance set to mop up Rs 17,500 crore via QIP, warrants

Mumbai: Bajaj Finance will raise ₹17,500 crore through a mix of share sales to institutional investors via a qualified institutional placement (QIP) and warrants issued to promoters as it prepares for its next phase of growth.

It marks the first equity fundraising by the country's largest non-banking financial company (NBFC) since its similar ₹10,000 crore capital raise in November 2023.

In a late-night notice to the stock exchanges on Thursday, Bajaj Finance said the company's board of directors had approved raising ₹11,700 crore through a QIP and ₹5,800 crore through the issue of warrants via a preferential allotment to promoter Bajaj Finserv.

"The company will be seeking approval of the shareholders for the proposed QIP by convening an extraordinary general meeting," it said.

Issuing warrants to the holding company, Bajaj Finserv, will help the largest promoter group maintain its 51.30% stake in the NBFC. Additionally, the promoter's skin in the game boosts market sentiment, giving institutional investors the confidence to increase their stakes in the company.

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"Bajaj Finance has always raised money every 2.5 to three years to generate capital for its immediate growth. The size of the proposed capital raise is large but still relatively modest compared to the size of the company's loan book, which is more than ₹5 lakh crore," said an analyst with a private sector brokerage, who did not wish to be identified. "Assuming it is leveraged five to six times, this will mean an infusion of more than ₹1 lakh crore in capital into the company."

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At the end of June, Bajaj Finance had reported consolidated assets under management (AUM) of ₹5.47 lakh crore, up 24% from ₹4.41 lakh crore a year ago. The company added ₹36,969 crore in AUM during the quarter, largely due to strong loan growth.

Consolidated net profit increased 27% year-on-year to ₹5,986 crore during the quarter.

The capital adequacy ratio was reported at 21% as of June 30.

The company's shares ended at ₹949.35 apiece on the BSE on Thursday, down 1.24% from the previous close. The markets were shut on Friday on account of Mahatma Gandhi Jayanti.