Shares of Bajaj Finance were hovering near a record high after the non-banking financial company said it would raise ₹10,000 crore to bolster its retail operations.

What Happened: Leading non-banking financial company Bajaj Finance has received board approval for a capital raise through a qualified institutions placement (QIP) and preferential share issuance. This marks the company’s largest capital raise to date, with a focus on its retail finance business.

Of the total amount, ₹8,800 crore will be raised via QIP, and the remaining ₹1,200 crore will be secured through preferential share allotment to its parent company, Bajaj Finserv.

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This marks Bajaj Finance’s fourth QIP fundraising effort in the past eight years. Previously, it raised ₹8,500 crore in November 2019, ₹4,500 crore in September 2017, and ₹1,400 crore in June 2015.

As per a recent exchange filing, ₹1,200 crore will be raised by issuing 15.5 lakh warrants to Bajaj Finserv on a preferential basis. These warrants can be converted into an equivalent number of equity shares within 18 months of allotment.

At the time of subscription and warrant allotment, 25% of the amount will be due, with the remaining 75% payable upon exercising the options associated with each warrant.

Following the conversion of preferential warrants into equity, Bajaj Finserv’s ownership in Bajaj Finance will increase from 52.45% to 52.57%. The issue price for these shares will be determined in accordance with applicable regulations.

Although the company has not disclosed the specific purpose for the capital raise, analysts suggest it may be aimed at supporting business expansion and preparing for increased competition, particularly with the entry of Jio Financial Services into the segment.

Price Action: Bajaj Finance’s share price was trading 1.35% higher at ₹7,956.95 on Friday morning.

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