Indiabulls Housing Finance is aiming to raise up to Rs 1,000 crore through a qualified institutional placement (QIP) launched on Wednesday as well as partial divestment of its stake in UK-based OakNorth Bank in tranches, sources said.
"In this, Rs 500 crore (about USD 68.13 million) each is targeted to be raised through the QIP and divestment in OakNorth Bank in next two-three days," a source said.
The non-banking finance company (NBFC) intends to raise more capital during this month, another person privy to the fund raise plans said.
The Securities Issuance Committee of the board at its meeting held on Wednesday approved the floor price for the QIP at Rs 206.70 per equity share, Indiabulls Housing Finance said in a regulatory filing.
At its extraordinary general meeting (EGM) held on July 29, the board had sought shareholders' approval for raising up to USD 300 million (about Rs 2,200 crore) by issuing securities through QIP or through foreign currency convertible bonds (FCCBs) during the course of the next one year.
"The company may offer a discount of not more than 5 per cent on the floor price so calculated for the issue (QIP)," Indiabulls Housing Finance said in the filing on Wednesday.
The committee will meet next week (September 14) to approve the issue price, including a discount, if any, for the equity shares to be allotted to the qualified institutional buyers (QIBs), the company said.
The intent of the QIP is to augment the long-term resources of the company and maintain sufficient liquidity for meeting funding requirements for its business activities, the company had said after the EGM in July.
The successful issue of the securities will underline the confidence in the company, especially in the backdrop of the prolonged liquidity squeeze that the NBFC/HFC sector is facing and business disruption due to COVID-19.
"Infusion of fresh capital under the current circumstances will demonstrate to key industry participants such as lenders - especially debt market investors and rating agencies of the company's ability to tap equity markets periodically to fund growth," it said in a summary of the outcome of the EGM on July 29.
The company also said it was optimistic about growth after having successfully demonstrated liquidity of loan assets over the past 20 months.
Lending opportunities in the housing finance industry continue to be strong, and with the competitive landscape now very benign, this fresh capital will serve as a growth capital as lending activity picks up with economic revival, it had said.
In a separate filing, the company said it is in the process of exploring various options in connection with the partial divestment of its equity shareholding in OakNorth Bank Ltd in one or more tranches.
"The divestment shall result in boosting CRAR (capital to risk weighted assets ratio) and shall free up capital to grow the loan book of the company," it said.
It had invested Rs 663 crore in November 2015 for a 40 per cent stake in OakNorth Bank.
Within two years of this, in November 2017, the company recouped its investment by selling about 10 per cent stake to the Government of Singapore's investment arm GIC for Rs 770 crore.
Founded in 2015 to address the mid-market funding gap in the UK, a highly competitive and regulated market, OakNorth Bank became profitable in just 11 months.
Within four years of operations, it has grown its deposits to just under 3 billion British Pound and its loan book to over 4 billion British Pound, Indiabulls Housing Finance said.