Chola DBS considers issue of fresh equity shares aggregating to Rs 100 cr to IFC

Cholamandalam DBS Finance Ltd (CHOLA DBS), the Chennai based NBFC belonging to the Murugappa Group is proposing to issue fresh Equity shares aggregating to Rs 100 Crores to IFC, a member of the World Bank Group. The issue is proposed to be made by way of a preferential allotment of 1,08,93,852  Equity shares of Rs 10 each at a price of Rs 92 Per share, in accordance with Chapter VII of Securities and Exchange Board of India ( Issue of Capital and Disclosure Requirements) Regulations 2009.

The proposal for a preferential placement to IFC on the above lines has been approved by the Board of Directors of Chola DBS at a board meeting held on Saturday, 3rd April 2010 in Chennai. This proposal is subject to the approval of the Board of IFC, shareholders of Chola DBS, and relevant regulatory authorities.

It may be recalled that the company had allotted 3,00,00,000 1% fully convertible cumulative Preference shares ( FCCPS) of Rs 100 each aggregating to Rs 300 Crores in March 2009 and the said FCCPs are due to be converted before Sep 2010. In order to maintain the minimum public shareholding under Continuous listing guidelines, it is proposed to raise the above Equity capital, which in addition will be used for meeting the growth / Capital adequacy requirements of the Company.

IFC has made several investments in India including in the financial services space. The proposed investment by IFC in Chola DBS augurs well for the NBFC as the company will derive the experience and support of IFC over the long term. Post Capital infusion by IFC, and conversion of the Preference Shares, the Net worth of the company will be close to Rs 900 Crores and the Promoters will continue to hold 74.9% in the Equity capital of the Company.

About Murugappa Group: Headquartered in Chennai, the Rs. 15,907 crores (USD 3.14 billion) Murugappa Group is one of India's leading business conglomerates. Market leaders in diverse areas of business including Engineering, Abrasives, Finance, General Insurance, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, constructions, Bio-products and Nutraceuticals, its 29 companies have manufacturing facilities spread across 13 states in India. The organization fosters an environment of professionalism and has a workforce of over 32,000 employees. The Group has forged strong joint venture alliances with leading international companies like Mitsui Sumitomo, Foskor, Cargill and Groupe Chimique Tunisien has consolidated its status as one of the fastest growing diversified business houses in India.