Photo: Mint
Photo: Mint

Investors cheer Bajaj Finance’s fund raising plan; shares surge

  • Bajaj Finance Ltd's was the biggest gainer among Nifty 50 companies on Tuesday, rising 3.3% and closing at 4,250.3
  • Bajaj Finance had raised 4,500 crore in 2017 through a QIP

NEW DELHI : Shares of Bajaj Finance Ltd, a subsidiary of Bajaj Finserv Ltd, jumped on Tuesday after the consumer-focused non-banking financial company (NBFC) announced that it would raise funds through a qualified institutional placement (QIP) offer at a floor price of 4,019.78 apiece.

The stock was the biggest gainer among Nifty 50 companies today, rising 3.3% and closing at 4,250.3. Parent Bajaj Finserv followed suit, with shares rising 1.5% to end at 8,839.9.

According to a Mint report, Bajaj Finance Ltd plans to raise up to 8,500 crore, approximately $1.2 billion. The company did not disclose the size of the fundraise to the stock exchanges.

“Our company intends to use the net proceeds of the issue to augment the long-term resources for meeting funding requirements for our company’s business activities and general corporate purposes and other purpose as per our company’s growth strategy and to meet the capital adequacy norms laid down by the Reserve Bank of India," Bajaj Finance said in a stock exchange filing.

Investment banks JM Financial Ltd, Axis Capital Ltd, Kotak Mahindra Capital Ltd, Morgan Stanley and Nomura are advising the company on the share sale.

QIP is a capital-raising tool, through which listed companies can sell shares, fully and partly convertible debentures, or any securities, other than warrants that are convertible into stocks, to a qualified institutional buyer.

Bajaj Finance had raised 4,500 crore in 2017 through a QIP. So far this year, eight companies have raised 22,312 crore through the QIP route, primary market tracker Prime Database data showed.

The company had reported a rise of 63.1% in consolidated net profit to 1,506.3 crore in the September quarter. It had posted a net profit of 923.5 crore in the same period last year. The non-bank’s consolidated assets under management grew 38% to 1.35 trillion as of September.

This despite subdued consumer demand in India with rural consumption slipping to a seven-year low in the September quarter due to declining crop prices and lower income.

Additionally, Bajaj Finance posted a sharp jump in profit at a time when a large portion of the country’s NBFC sector has been struggling with liquidity crunch and low investor confidence after the collapse of one of the largest shadow banks Infrastructure Leasing and Financial Services (IL&FS) Ltd in September 2018.

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