Bajaj Finance and IIFL Finance are raising money as more Indians take retail and gold loans. Bajaj Finance wants to raise Rs. 11,700 crore (USD 1.25 billion) from big investors. IIFL Finance has approved a Rs. 6,414 crore deal led by global investment firm Blackstone. Both plans still need approvals from regulators and shareholders.
Bajaj Finance has started a share sale for institutional investors. The indicative price is Rs. 1,025 per share. That is a 4.99% discount to the last closing price.
The company will use the money to repay deposits, loans, commercial paper and bonds, as well as the interest due on them.
The sale follows an earlier approval to raise Rs. 17,500 crore through a qualified institutional placement and warrants. The company has already raised about Rs. 5,800 crore by giving warrants to its promoter and parent firm, Bajaj Finserv.
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Blackstone will invest Rs. 5,000 crore in IIFL Finance. Once the preference shares are converted, it will own about 16% of the company.
The promoters, Nirmal Jain and R. Venkataraman, will add Rs. 1,264 crore through warrants. Anchorage Capital will put in another Rs. 150 crore.
The new money should lift IIFL's capital adequacy ratio from 17% to about 30%. The company plans to grow its gold loan and other secured lending. It also wants to cut its borrowing costs and make its finances stronger.
IIFL also expects help from Blackstone in technology, data, and artificial intelligence. That could make its work smoother and improve how the company is run.
The two transactions reflect the rapid expansion of retail lending in India. Lending against gold has emerged as an important business line, with more households seeking loans from registered lenders against their gold. To meet this rising demand, the lenders require additional funding.
Bajaj Finance and IIFL Finance have adopted different fundraising approaches. Bajaj Finance is issuing shares to institutional investors, while IIFL Finance is bringing in a foreign investor. Both of them seek to build a strong foundation for future growth. At the moment, the two initiatives await the required approvals.