Bajaj Finance is looking to dilute around 29 per cent that may allow it to raise as much as Rs 950 crore ($211 million) through a mix of qualified institutional placement (QIP) and a fresh issue of equity convertible warrants to its promoter firm (Bajaj FinServ). Bajaj Finance is the financing subsidiary of Bajaj FinServ.
The company’s board approved a plan to issue 7.5 million shares in a QIP besides a matching issue of equity convertible warrants to enable Bajaj FinServ maintain its majority holding in the company.
At the last traded price of Rs 633.9 a share, the company can potentially raise as much as Rs 950 crore.
Formerly an auto finance company, Bajaj Auto Finance rechristened itself as Bajaj Finance last year. This was to reflect the change in its business profile, as the company diversified beyond vehicle finance to a broader consumer and small business lending company. It is into loans for two-wheelers and three-wheelers, consumer durables, small business loans, construction equipment finance, mortgages and loan against securities.
The parent company Bajaj FinServ is also the holding company for Bajaj group’s insurance businesses.
During the fourth quarter ended March 31, 2011, Bajaj Finance had raised Rs 525 crore ($117 million) through long-tenor borrowings to strengthen its resources. The firm had assets under management of Rs 7,571 crore as of March 31, 2011.
While consumer durable financing accounted for bulk of its loans in FY11, vendor financing grew the fastest, multiplying almost nine times over the year ago period.