A consortium of investors led by Singapore-based Amansa Capital (founded by former Temasek India director of investments Akash Prakash) are investing Rs 150 crore ($32 million) in Cholamandalam Investment & Finance Co (CIFCL). The company has scheduled a EGM on October 6 for approving the issue as well as raising a further Rs 100 crore through redeemable preference shares.
The non banking finance company plans to use the money for projected growth in disbursements and augmenting its capital adequacy ratio.
Amansa will pick 2.6% in the company for Rs 50 crore besides Aquarius Investments (Rs 42.5 crore), Reliance Capital, Trustee (Rs 20 crore), India Capital Fund Ltd (Rs 18 crore), India Capital Opportunities (Rs 4.5 crore) and an existing investor IFC bringing in Rs 15 crore.
IFC, the private sector investment unit of the World Bank, had early this year picked 9.92% stake for Rs 100.23 crore in the firm and has put in additional money to maintain that stake. However, this time the issue is at a much higher price of Rs 160 per share compared to issue at Rs 92 per share in May this year. CIFCL share price was at Rs 172.9, down 0.6% in mid day trade on Monday.
The preferential allotment comes months after the Murugappa Group’s decision to regain complete control over the 30-year-old finance company by buying out its foreign partner Singapore’s DBS Bank for Rs 376 crore(at Rs 91 per share).
CIFCL had earlier said, the initial preferential offer to IFC was to improve the liquidity position and strengthen its capital adequacy ratio. The stake sale was also to maintain the minimum public shareholding of 25%. Promoters holding at present stands at 74.96%.
The group had also said it is acquiring the Rs 150 crore investment made by DBS Bank by way of 1% FCCPS that will on conversion push up promoters stake beyond 75% and will require the group to dilute holding. The proposed preferential issue for raising Rs 150 crore will bring it down to 69.07%.
CIFCL has 170 branches with a loan portfolio of Rs 5,000 crore almost two thirds of which is vehicle finance. The size of corporate mortgage products is Rs 1,100 crore, home loan equity of Rs 500 crore, and a personal loan of Rs 500 crore.
NBFC business has been an attractive space for private equity investors. Muthoot Finance Ltd, an NBFC which is the largest gold loan company in India, raised Rs 200 crore in funding from Baring India, Matrix Partners India and Kotak Private Equity recently. While Temasek backed Fullerton is already present in the business, TPG had picked up a large stake in Shriram City Union Finance.