Bajaj Finance picks banks for Rs 7,000-8,000 crore share sale


Mumbai: Sanjiv Bajaj-backed Bajaj FinanceNSE 0.74 % has appointed investment banks Moran Stanley, JM FinancialNSE 3.30 %, Kotak Mahindra Capital Co and Nomura Holdings to help raise around Rs 7000-8000 crore through a qualified institutional placement or QIP. The issue that will help the non-banking finance company shore up its equity base, is expected to see a lot of interest from institutional investors in the aftermath of the IL&FS fiasco.

“The company has appointed investment bankers and the road shows will soon begin,” said one of the persons with knowledge of the development.

The company that has seen a steady growth and has been unfazed by the storm that gripped the non-banking finance sector in the company with the IL&FS and DHFL fiasco is expected to see a lot of interest from global as well as domestic institutional investors. “The company plans to come up with the issue around Diwali this year and is expected to raise around Rs 7000-8000 crore,” said another person with knowledge of the deal.

The stick of Bajaj Finance Ltd closed at Rs 3295.00 a share on the bourses, up 1.38% on Thursday. The current market capitalisation of the company is around Rs 1.91 lakh crore.

“The company might look at diluting upto 5% stake in the company,” the person quoted above said.

Bajaj Finance is one of the few NBFCs that have been showcasing strong and sequential growth over the last few years. Bajaj Finance reported consolidated AUM growth of 41% YoY in June 2019 quarter led by rural lending (55% YoY) and mortgages (51%YoY). SME and commercial lending growth slowed down to 34% and 25% YoY respectively. Consumer loans clocked in 40% YoY growth, albeit slower compared to 56% in Q4FY19. Consolidated PAT grew 43% YoY to Rs 1,195 crore in June quarter characterized by continued strong AUM growth coupled with stable margins/asset quality.

One of the key differentiators of Bajaj Finance compared to other NBFCs is its non-core fee income generation. The company doubled such non-core fee income YoY to Rs 1700 crore in FY19. As a percentage of AUM, fee income was up 60bp YoY to 1.7%. While this growth was driven by multiple sources, the one that really stands out is distribution fees, which almost tripled YoY to Rs 670 crore.