Bajaj Finance Eyes $1 Bn Fundraising Move
Bajaj Finance, a Pune-based financial giant, is gearing up for a substantial fundraising effort, aiming to secure between USD 800 million and USD 1 billion through a Qualified Institutions Placement (QIP) or preferential issue, according to a media report.
The company has enlisted the services of four prominent investment banks, signaling its intent to strengthen its financial position and enter a new phase of expansion. The selected quartet of investment banks includes JM Financial, Citi, Morgan Stanley, and BofA Securities. This ambitious fundraising plan is part of Bajaj Finance's strategy to engage in large-scale transactions periodically.
A final decision regarding the exact amount to be raised and the preferred fundraising method is expected to be made during the upcoming board meeting scheduled for 5 October. The funds generated from this initiative are intended to serve as growth capital and further bolster the company's financial stability.
Despite experiencing a 21 per cent surge in its stock price over the past six months, indicative of investor confidence in the company's prospects, Bajaj Finance is considering this capital infusion, possibly to support its robust growth in assets under management (AUM), which saw a 32 per cent increase in the first quarter.
Bajaj Finance is looking to explore expansion opportunities across various product lines, including microfinance, as well as new segments like automobile and tractor financing and gold loans. These strategic moves are aimed at driving the company's growth, as highlighted in a recent report by Nomura, a leading brokerage firm.
However, Bajaj Finance faces stiff competition from players like Jio Financial Services and private banks such as HDFC Bank and ICICI Bank in the unsecured lending sector, a critical aspect of its business model. Despite these challenges, the company remains optimistic, with a significant liquidity buffer of Rs 12,704 crore as of 30 June and plans to add 12-13 million new customers in the fiscal year 2024.
