Bajaj Finance hires three banks for $700 million QIP
Mumbai: Bajaj Finance Ltd has hired three investment banks and started work on a qualified institutional placement (QIP) to raise around $700 million (Rs4,500 crore), two people aware of the development said.
The non-banking financial company is engaged in consumer finance, small and medium enterprises (SME) finance, commercial lending and wealth management.
“Bajaj Finance has hired investment banks JM Financial, Kotak Mahindra Capital and Goldman Sachs to manage its institutional share sale. The company and the banks have started work on the share sale programme and the fund-raising is likely to be launched before the end of this quarter,” said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.
In 2015, Bajaj Finance had raised Rs1,400 crore through a QIP managed by JM Financial. The second person cited above said Bajaj Finance should be able to easily raise the upper limit of $700 million set by the company’s board.
“If you see, this year, the equity capital markets fund- raising has been dominated by the banking and financial services sector. We have seen very large QIP deals from the banking sector. Investors are extremely keen on quality banking and financial services stocks; liquidity continues to remain high and therefore, demand for a company like Bajaj Finance, which is a quality name, should not be a problem,” he said.
Bajaj Finance is growing fast and needs capital to replenish its Tier-I capital to keep funding that growth, he added.
Tier-I or the equity capital base of the lender was at 14.20% as on 30 June.
The company’s board had on 19 July approved raising up to Rs4,500 crore through a QIP. The resolution has to be approved by the company’s shareholders. Bajaj Finance is seeking shareholder consent through a postal ballot, which closes on 24 August. Bajaj Finance and Goldman Sachs declined to comment. Emails sent to JM Financial and Kotak Mahindra Capital were not answered. Bajaj Finance’s QIP will be the fourth $500 million plus equity issuance through this route so far this year.
In just seven months of the calendar year, QIP fund-raising in Indian markets is already close to breaching the previous record high of Rs34,675 crore seen in 2009. So far this year, 17 companies have raised Rs34,181.5 crore, according to data from primary market tracker Prime Database. QIP fund-raising has been led by the banking and financial services sector, with banks such as State Bank of India (SBI) and Kotak Mahindra Capital raising the largest QIPs ever seen from a public and private sector company respectively. In June, the country’s largest lender SBI raised Rs15,000 crore through a QIP, while in May, Kotak Mahindra Bank raised Rs5,803 crore through its institutional share sale.
Other banks that have tapped the QIP route this year include Yes Bank, Federal Bank, DCB Bank and United Bank of India, which have collectively raised close to Rs8,000 crore.
Another private sector lender RBL Bank Ltd recently raised Rs1,680 crore through a private placement of shares to institutional investors.