Shares of IIFL Finance surged about 3% during the early trading session on Wednesday ahead of its meeting of the board of directors on Wednesday, March 13, to consider raising of funds. The non-banking finance company has approved raising up to ₹1,500 crore via issue of shares as it attempts to shore up capital days after the Reserve Bank of India (RBI) barred it from offering gold loans.
The company will raise another ₹500 crore via non-convertible debentures on a private placement basis.
The fundraising proposal comes after top shareholder Fairfax India Holding Corporation agreed to provide up to $200 million in liquidity support to IIFL Finance, assuaging liquidity concerns among investors and lenders after the central bank's direction.
However, the mode in which the liquidity support will be provided to the company, has not been specified.
Fairfax India said that the liquidity support is in response to the concerns amongst the company's investors and lenders post the RBI action. The infusion will be done on terms that are yet to be mutually agreed and subject to applicable laws.
"We have been long-term investors in the IIFL Group of companies and have full trust and confidence in the company's strong management team led by Nirmal Jain and R Venkataraman. We are confident that Nirmal and Venkat will take corrective actions to meet and exceed RBI's compliance standards," Fairfax India chairman Prem Watsa said.
IIFL Finance Director and Founder Nirmal Jain called Fairfax's proposal "generous" along with "very timely" and "motivating." He added that the company is fully committed to comply fully with the RBI's directives.
Based on the December quarter shareholding pattern Fih Mauritius Investments, a Fairfax entity, held a 15.12% stake in IIFL Finance.
IIFL Finance shares have tumbled about 30% since RBI barred the lender from disbursing gold loans, flagging "serious deviations".
First Published: Mar 13, 2024 9:36 AM IST
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