On the 5th of October, Bajaj Finance unveiled, through an exchange filing, its strategic initiative to raise a substantial sum of Rs 10,000 crore. This substantial capital infusion is poised to be executed through a two-pronged approach:

A capital raising effort of up to Rs 8,800 crore via a Qualified Institutions Placement ("QIP"), which entails the issuance of equity shares with a face value of Rs 2 each, and a additional financial through a Preferential Issue (“PI”). The latter entails the issuance of a maximum of 15,50,000 warrants, convertible into an equivalent number of equity shares of face value of Rs 2 each, to its promoter entity, Bajaj Finserv. This Preferential Issue is set to raise an aggregate amount not exceeding Rs 1,200 crore through preferential allotment.

The company will be seeking approval of the shareholders for the proposed QIP and PI by convening an Extra Ordinary General Meeting subject to applicable provisions/circulars issued by Ministry of Corporate Affairs from time to time.

This strategic financial move underscores Bajaj Finance's commitment to fortifying its financial position and propelling its growth trajectory.

Upon the conversion of the preferential warrants into equity, Bajaj Finserv's ownership stake in Bajaj Finance is set to experience a marginal increase, shifting from 52.45 percent to 52.57 percent. It's important to note that the determination of the issue price for this transaction will be made at a later stage.

Each warrant, as per the terms of the offering, carries the right to be converted into an equivalent number of equity shares. This conversion privilege remains valid for a span of 18 months from the date of allotment. An amount equivalent of 25% of the consideration shall be payable at the time of subscription and allotment of warrants, the remaining 75% of the consideration shall be payable on the exercise of options against each such warrant.

However, it's imperative to highlight that should the option to convert these warrants into equity shares not be exercised within the stipulated timeframe, the warrants will, regrettably, lapse, and the consideration paid by the Proposed Allotment shall be forfeited by the company. This provision underscores the time-sensitive nature of this financial instrument and the need for prompt action on the part of the holder.

KEY BUSINESS MATRICS

Earlier this week, the company disclosed key business metrics outlining their consolidated growth performance for the quarter ending September 30.

1. Loan Book: Bajaj Finance reported an impressive 26 percent surge in new loans booked during the July to September quarter, amounting to 85.3 lakh loans, compared to 67.6 lakh in the corresponding period of the previous year.

2. Deposit Book: The company's deposit portfolio exhibited substantial growth, reaching approximately Rs 54,800 crore as of September 30, 2023. This figure marked a remarkable year-on-year increase of 39 percent, compared to the Rs 39,422 crore recorded in the same month the previous year.

3. Assets under Management (AUM): Bajaj Finance's assets under management (AUM) experienced robust growth, escalating by 33 percent to approximately Rs 290,200 crore by the close of September, compared to Rs 218,366 crore at the end of September the preceding year. The company notably highlighted an AUM growth of around Rs 20,100 crore during Q2 FY24.

4. Franchise Business: The customer franchise segment demonstrated notable expansion, with customer numbers rising to 76.56 million, compared to 62.91 million in the previous year, reflecting an increase of 3.58 million customers.

These financial metrics underscore Bajaj Finance's commendable performance and its continued commitment to achieving substantial growth across various facets of its business operations.