IIFL Finance planning Rs 1,500 cr rights issue to shore up capital adequacy

Adds two directors on board, rejigs top management

IIFL Finance, which is facing curbs on its gold loan business, is planning to raise up to Rs 1,500 crore of equity capital through a rights offer in the first quarter of next financial year to shore up its capital adequacy.
 

The Mumbai–based finance company is also planning to raise up to Rs 500 crore as debt by issuing non-convertible debentures to investors through private placement.
 

The company appointed two independent directors — Bijou Kurien and Nihar Niranjan Jambusaria — to its board. IIFL Finance also rejigged its top management by appointing Abhiram Bhattacharjee, who is currently serving as chief of staff, as the chief operating officer with effect from March 13, 2024. It also appointed in Shivalingam A Pillai as chief compliance officer. Mauli Agarwal, the current chief compliance officer, will take the role of company secretary and compliance officer of IIFL Finance. Rupal Jain, company secretary and compliance officer, has resigned to pursue higher studies.

ALSO READ: IIFL Finance to raise $242 mn via rights basis, non-convertible debentures
 

Kapish Jain, group chief financial officer, IIFL Finance, said the objective of raising funds was to boost the confidence of the market and stakeholders at large and help further enhance the current liquidity position of the company, and added that he company continued to be well capitalised. The firm’s stock closed 3.36 per cent lower at Rs 383.95 per share on the BSE on Wednesday.

The rights issue of equity shares will be offered to the existing shareholders at Rs 300 per share in the ratio of one share for every nine shares held, according to a statement by IIFL Finance.

The largest institutional investor Fairfax India, and the promoter group comprising Nirmal Jain and R Venkataraman and family, have at the minimum committed to fully subscribe to their share of the rights offer aggregating to close to Rs 40 per cent of current shareholding. It shall be a fast-track rights issue and is expected to conclude before the end of Q1 FY25.  

The proposed equity raise shall also significantly improve the capital adequacy of IIFL Finance, he added.

ALSO READ: Rating agency ICRA places IIFL Finance's long-term ratings under watch

The company has also appointed two new independent directors -- Bijou Kurien and Nihar Niranjan Jambusaria -- on its board. Bijou Kurien is a consumer leader with over 40 years of experience in building brands, businesses and creating organisations. He has worked with Hindustan Unilever, Titan and worked with Reliance Industries as the President & CEO of its retail venture — Reliance Retail. Jambusaria, a chartered accountant, has been a senior partner at N N Jambusaria & Company.

IIFL Finance also rejigged its top management by appointing Abhiram Bhattacharjee, who is currently serving as Chief of Staff, as the Chief Operating Officer with effect from March 13, 2024. It also appointed in Shivalingam A Pillai as Chief Compliance Officer.

Mauli Agarwal, current Chief Compliance Officer, will move on to another role as company secretary and compliance officer of IIFL Finance. Rupal Jain, Company Secretary and Compliance Officer, has resigned to pursue higher studies.

Reserve Bank of India has restricted IIFL Finance from sanctioning and disbursing fresh gold loans following “material supervisory concerns” and to protect the interests of customers with immediate effect. On March 12, ICRA had placed long term ratings of IIFL Finance on watch with 'Negative' implications due to the uncertainty pertaining to the period of the ban on its gold loan business and the likely impact. The NCDs and long term bank lines carry “AA” rating.

RBI slaps penalty on BoI, Bandhan, Indostar Capital

The Reserve Bank of India (RBI) has slapped penalty on three lenders — Bank of India (BoI), Bandhan Bank 

and Indostar Capital — amounting to Rs 1.8 crore for breach of norms on rate of interest on deposits and monitoring of frauds, etc.
 

BoI was fined Rs 1.4 crore for non-compliance with certain directions on interest rate on deposits and advances, as well as customer services. Bandhan Bank was fined Rs 29.55 lakh for non-compliance with direction on interest rate on deposits. Indostar Capital Finance was fined Rs 13.6 lakh for non-compliance with directions on monitoring of frauds in finance companies.