5paisa Capital to raise Rs 251 crore at Rs 500 per share; stock zooms 20%

The preferential issue price of Rs 500 apiece is at 70 per cent premium over Tuesday's closing price of Rs 292 per share on the NSE.

Shares of 5paisa Capital were locked at the 20 per cent-upper circuit at Rs 350.40 on the National Stock Exchange (NSE) on Thursday after the firm's board approved fund raising of Rs 251 crore at Rs 500 per share on preferential basis to marquee investors and Promoters and Promoter Group. The preferential issue price is at 70 per cent premium over Tuesday’s closing price of Rs 292 per share on the NSE.

A combined around 200,000 equity shares had changed hands on the counter and there were pending buy orders for around 79,000 shares on the NSE and BSE till the time of writing of this report.

Of the total amount, the company plans to raise around Rs 191 crore by issuing 3.82 million equity shares to marquee investors. The proposed investors for preferential allotment include Prem Watsa's Fairfax, one of the co-promoters of the brokerage, Hong Kong-based Ward Ferry, and Rimco.

Menawhile, promoters Nirmal Jain, Madhu Jain and R Venkataraman will subscribe to 1.2 million warrants worth of Rs 60 crore. The warrant would be allotted only upon payment of 25 per cent of the price of warrant at the time of allotment. "Each warrant is convertible into 1 equity shares and the conversion can be exercised at any time within a period of 18 months from the date of allotment, in one or more tranches, as the case may be and on such other terms and conditions as applicable," 5paisa Capital said.

The management said the business has been witnessing rapid growth with total income of over Rs 140 crore for nine months (April-December) of FY21, up 98 per cent year-on-year. In the midst of growing number of players, 5paisa has carved out a robust customer franchise of more than 1.3 million customers and 6.5 million mobile app users.

"We have grown our product offering to customers over the years which currently include broking, mutual funds, insurance, peer-to-peer lending, international stocks, gold investing and margin funding and look forward to adding more products. The availability of equity funds will help the Company accelerate its investment in customer centric technology and sustain the pace of growth," the management said.

In the past six months, the stock of 5paisa Capital, which is engaged in providing financial products through its online technology platform and mobile applications, has underperformed the market by falling 1 per cent, as compared to a 22 per cent rally in the Nifty50 index. The stock had hit an all-time high of Rs 465 on July 27, 2020.