ChrysCapital-backed auto finance firm Mahindra & Mahindra Financial Services has raised Rs 426 crore ($92 million) through a qualified institutional placement. The company plans to use the money to enhance its tier I capital besides other purposes.
The company’s capital adequacy ratio was at 17.37% as of December 31 which will improve further with the QIP issue.
The firm has not disclosed the names of institutional investors who subscribed to the issue but said post issue the parent firm M&M will own 56% as compared to 60.8% as of December 31, 2010. The fresh shares would together comprise around 6% of the expanded capital base.
The new shares have been issued at Rs 695 per share as against current market price of Rs 717 which translates into immediate unrealised gains of around 3% for the investors.
The issue was subscribed almost four times despite the turbulent movement of the Indian stock market. Kotak Mahindra Capital, Citigroup Global Markets and JM Financial were the managers to the issue.
This follows exit and part exit of private equity investors such as Standard Chartered Private Equity and ChrysCap in the recent past. Standard Chartered PE apparently sold a large chunk of its holding in Mahindra & Mahindra Financial Services late last year. The PE firm, which held around 9.8% as of June end, had been selling chunks of its holding since mid 2010. It doesn’t figure among the shareholders owning over 1% in the finance company as of December 31.
ChrysCapital, a pre IPO investor, has also been on a gradual exit mode having part-exited through multiple market transactions in the recent past. Its holding dropped over 5% in the last quarter and as of December 31 held 1.5% in Mahindra & Mahindra Financial Services.