India: Mahindra Finance plans to raise up to $312m

Mahindra and Mahindra Financial Services Ltd, or Mahindra Finance, is an NBFC that provides auto loans primarily for purchasing tractors, utility vehicles and cars. Photo: Bloomberg

Mahindra and Mahindra Financial Services Ltd (Mahindra Finance) is preparing to raise as much as Rs2,000 crore equity capital, said two people aware of the development. Non-banking financial company (NBFC) Mahindra Finance provides auto loans primarily for purchasing tractors, utility vehicles and cars. Mahindra and Mahindra Ltd, India’s largest tractor and utility vehicle manufacturer, holds 51.2% stake in the NBFC.

Mahindra Finance is exploring various routes for the proposed fund-raising, including a qualified institutional placement (QIP) and a private placement of shares with private equity investors or other institutional investors, the people cited above said on the condition of anonymity.

QIP is a capital-raising tool through which listed companies can sell equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.

The company has started talking to investment banks and is expected to hire a banker soon to advise on the fundraise, one of two persons cited above said.

“The fundraise will augment the NBFC’s capital base and help strengthen its balance sheet. The company has seen rise in its gross and net non-performing assets (NPA) and higher provisions for the same,” he added.

In an email response, Mahindra Finance said it has no such plan.

In the first quarter of 2017-18, Mahindra Finance reported a 46% decline in net profit to Rs58.42 crore. It had reported a net profit of Rs107.64 crore in the corresponding quarter of last fiscal.

Gross non-performing assets (NPAs) grew to 10.5% from 9% a year ago, while net NPA grew to 4.4% from 3.6%.

The company had a network of 1,183 offices and total assets under management (AUM) of Rs47,576 crore as on 30 June. A QIP will add Mahindra Finance to the long list of financial services companies that have opted for the route to raise funds this year.

In August, Mint reported that Bajaj Finance Ltd has hired three investment banks to start work on a QIP that could see the company raise up to Rs4,500 crore (about $700 million).

This year, QIP fundraising, which is close to breaching the all-time high of Rs34,675 crore seen in 2009, has been dominated by large issuances from the banking and financial services sector.

So far this year, 17 firms have raised Rs34,181.5 crore, according to data from primary market tracker Prime Database.

Earlier this year, State Bank of India (SBI) and Kotak Mahindra Bank Ltd raised the largest QIPs ever seen from public and private sector companies, respectively.

In June, the country’s largest lender State Bank of India raised Rs15,000 crore through a QIP, while in May, Kotak Mahindra Bank raised Rs5,803 crore through an institutional share sale.

This article was first published on LiveMint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.