Mumbai: Consumer focussed lender Bajaj Finance Ltd has hired investment banks to help it raise up to $1 billion through a share sale, said two people aware of the development.
“They are looking to raise funds through a qualified institutional placement (QIP). The lender has appointed i-banks Kotak Mahindra Capital, JM Financial and Nomura to manage the share sale,” said one of the persons cited above, requesting anonymity as he is not authorized to speak to the media.
The proposed share sale is expected to be closed within the current fiscal year, he added.
Emails sent to Bajaj Finance, Kotak Mahindra Capital and JM Financial did not elicit a response. A spokesperson for Nomura declined to comment.
On Thursday, Bajaj Finance told stock exchanges that its board of directors will meet on 17 September to consider, “a proposal for raising of funds by way of qualified institutions placement, subject to such regulatory/statutory approvals as may be required, including approval of the shareholders of the company”.
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.
The proposed share sale will help the non-bank lender shore up its balance sheet when consumer demand is showing signs of weakness and liquidity has been scarce for lenders.
For the quarter ended 30 June, Bajaj Finance’s assets under management grew by 41% to ₹1.29 trillion.
“Gross NPA and Net NPA stood at 1.60% and 0.64%, respectively, on 30 June 2019. Adjusted for IL&FS exposure, GNPA and NNPA stood at 1.42% and 0.50%, respectively,” the lender said in its recent exchange filings.
Bajaj Finance has also been exploring other routes to diversify its funding sources. “During the quarter, we established a secured Euro Medium Term Note (MTN) Programme for programme value of $1.50 billion on Singapore stock exchange. We intend to raise $750 million through ECB (external commercial borrowing), as allowed under automatic route, to diversify and strengthen our liability profile by March 2020,” the lender said.
Till August, only five firms had tapped the markets to raise funds via QIP this year, raising a total of ₹8,412.87 crore, while in 2018, 25 firms raised ₹16,587 crore through this route, data from primary market tracker Primer Database shows.