Aditya Birla group to dilute stake in financial services arm via QIP

Roadshows to raise up to Rs 3,000 cr by selling 5-7% stake in AB Capital

Several West Asia-based sovereign funds, including the Abu Dhabi Investment Authority (ADIA), have shown an interest to invest in the share sale of Aditya Birla Capital (AB Capital).

The Aditya Birla group has commenced roadshows among potential investors to raise up to Rs 3,000 crore by selling its stake in its financial services company, bankers said. The group is estimated to dilute 5-7 per cent in the company, including by means of the greenshoe option, through the qualified institutional placement (QIP) route.
 

Grasim, the holding company of the group, holds 54.2 per cent in the firm while the promoters own 16.8 per cent. In all, the promoter group held 71.02 per cent in AB Capital as on March 31, 2023. “The ADIA acquired 10 per cent in Aditya Birla Health Insurance (a subsidiary of AB Capital) in August last year for Rs 665 crore and is likely to participate in the QIP of Aditya Birla Capital as well,” said a banking source.
 

The timing of the QIP issue is being discussed with the bankers to the issue.
 

According to some media reports, the group has initiated discussion with four-five merchant bankers for the QIP.
 

The AB Capital share closed at Rs 165 on Monday, thus giving it a market valuation of Rs 40,044 crore.
 

An email sent to the AB group did not elicit any response.
 

The proceeds of the QIP are expected to be used for supporting growth in lending and insurance businesses, strengthening its digital offers, and meeting capital adequacy and solvency-related requirements.

In its NBFC (non-banking financial company) business, the company plans to focus on building granular portfolios by growing personal, consumer, and secured and unsecured business loans, especially among small- and medium-sized customers. The housing finance company, which has a loan book of Rs 13,808 crore as on March this year, plans to accelerate growth across both prime and fast-growing affordable housing segments.

The group, including Grasim, provided capital support to AB Capital in the last three years. Of the Rs 2,100 crore capital raised by AB Capital in FY20, the group had infused Rs 1,000 crore, of which Rs 770 crore was invested by Grasim.