Bajaj Finance plans Rs 10,000-crore fundraise as Jio takes guard
Bajaj Finance, India’s biggest non-banking finance company (NBFC) by market capitalisation, plans to raise as much as Rs 10,000 crore in a restricted share sale as it shores up its capital position amid the entry of Reliance Industries’ Jio Financial into retail lending. The exercise would involve equity divestment in favour of institutional investors and the holding company, Bajaj Finserv.
This is the company’s first equity capital raise since November 2019 and comes even as it is sitting on a comfortable capital adequacy of 23% — more than double the 10% mandated by the Reserve Bank of India for NBFCs classified in the upper layer and considered important for India’s financial system.
Bajaj Finance will issue Rs 8,800 crore worth of shares to institutional investors through a qualified institutional placement (QIP) and will also allocate shares worth Rs 1,200 crore to promoter company Bajaj Finserv.
The fundraising will have to be approved by the company’s shareholders in a proposed extraordinary general meeting.
Analysts say the company is preparing both for future growth and arming itself against the upcoming competition through this share sale.
“India is clearly in the midst of a strong retail lending cycle as Bajaj Finance’s pre-results numbers show. They have enough capital for now, but they are building ammunition for increased competition from the likes of Jio in the future,” said Shewta Daptardar, analyst at Elara Capital.
