The board has given Bajaj Finance permission to raise up to Rs 10,000 crore by issuing convertible warrants and qualified institutional placements (QIPs).
With the QIP offering, the business hopes to raise up to Rs 8,800 crore, and with convertible warrants, it intends to raise up to Rs 1,200 crore.
Preferentially, the business will provide promoter Bajaj Finserv 15,50,000 warrants, which are convertible into the same number of shares. Within 18 months following the date of allocation, the warrants may be converted into equity shares.
According to an announcement from the firm, Bajaj Finance will receive 25% of the entire value from the parent during the subscription and allotment of warrants, with the remainder amount received upon exercising of the options against the warrants.
Currently, Bajaj Finserv owns 31,78,16,130 shares, or 52.45%, of Bajaj Finance. The former will own a 52.57% share in the latter when all warrants are converted.
The funds raised will help fund Bajaj Finance’s future growth and strengthen its capital position.
Bajaj Finance’s provisional reports indicate that as of September end, the company has a combined net liquidity surplus of about Rs 11,400 crore.
As of September 30, its assets under control were Rs 2.9 lakh crore, a dramatic 33% increase from the same time last year. The non-bank financing major booked 8.53 million loans in the most recent quarter, up from 6.76 million in the same period previous year.
Its capital adequacy ratio was not disclosed in the provisional figures, although as of June’s end, it was still high at 24.61%, with tier-1 capital at 23%.
Despite having significant liquidity buffers, the business did not disclose why it was raising this amount of money, but experts believe it is building up capital to fend off potential competition from Jio Financial’s debut.
Shares of the business closed trading at Rs 7,850.90 on the National Stock Exchange unchanged prior to the announcement of the funding.