Financial services company Indiabulls Ventures Ltd is raising Rs 1,539.20 crore ($210 million) from four foreign institutional investors, including a private equity firm, to infuse long-term capital into two of its subsidiaries.
Indiabulls Ventures will make a preferential allotment of compulsorily convertible debentures to Tamarind Capital Pte Ltd, Hong Kong-bsed hedge fund Steadview Capital, US-based venture capital fund ABG Capital and DF International Partners.
Tamarind, a PE firm that is part of New Zealand billionaire Richard Chandler's investment firm Clermont Group in Singapore, is buying debentures worth Rs 740 crore, Indiabulls said in a stock exchange filing on Wednesday. Steadview Capital is subscribing to debentures worth Rs 614.20 crore, ABG Capital Rs 125.80 crore and DF International Rs 59.2 crore.
The Indian company will use the proceeds to capitalise lending arm Indiabulls Consumer Finance Ltd and Indiabulls Asset Reconstruction Co Ltd.
The debentures have been allotted at a 35% premium to the company's share price on Tuesday. They have to be converted into ordinary shares on or before 18 months from the date of issue. These debentures carry a coupon of 14.9% per annum.
Shares of Indiabulls Ventures fell 1.5% to close at Rs 408.45 apiece on the BSE on Wednesday while the benchmark Sensex advanced 0.55% in volatile trade to close at 34,033.96.
While Tamarind is the top investor in this preferential allotment, another investment arm of Clermont Group had sold a small chunk of its stake in Indiabulls Ventures during the quarter through March 2018.
Cinnamon Capital Ltd, the Clermont arm, held an 8.59% stake in Indiabulls Ventures at the end of June 2018 compared with 8.79% before, as per stock exchange data.
In July, Cinnamon sold more than half its stake via bulk deals. The PE firm’s stake dropped to 3.46% after the sale, VCCircle estimates show. The shareholding for the quarter ended September 2018 is not yet publicly available.
Shares of Indiabulls Ventures have collapsed 50% over the past two months as market sentiment weakened amid fears that non-banking finance companies and housing finance companies were facing a cash crunch.
The concerns have risen after Infrastructure Leasing & Financial Services (IL&FS) defaulted on its debt last month, sparking a sell-off in shares of NBFCs and mortgage lenders.
While the Reserve Bank of India (RBI) and the government are trying to ensure a cash crunch doesn’t cause a market collapse, NBFCs are finding it hard to raise funds and looking to divest their stakes as well as assets to shore up capital.
Some companies of Indiabulls Group, too, are selling assets. Indiabulls Housing Finance is looking to sell all or a part of its 18.7% stake in London-based lender OakNorth Holdings to a private equity fund, The Economic Times reported earlier this week. Indiabulls Housing’s stake is valued at up to Rs 4,500 crore, the report said.
In July, private equity giant Blackstone Group LP agreed to buy a commercial property in Chennai from Indiabulls Real Estate Ltd for Rs 850 crore ($123 million). The transaction was part of Indiabulls Real Estate’s decision to reorganise its commercial leasing business in India and exit non-core markets.