IIFL Finance has successfully raised Rs 1,271 crore through a rights issue as part of its strategic efforts to raise capital and support business expansion initiatives.
The decision to opt for a rights issue was prompted by the RBI‘s ban on March 4, which restricted the NBFC firm from disbursing gold loans due to supervisory concerns.
The rights issue, which commenced on April 30, 2024, and concluded recently, witnessed overwhelming response, with the offering oversubscribed by 135%, totaling 5,72,03,080 shares, according to data available on exchanges. Each share was offered at Rs 300, in the ratio of one share for every nine shares held by existing shareholders.
Promoters Nirmal Jain and R Venkataraman, along with their family, have fully subscribed to their allotted shares, reflecting their confidence in the company’s growth prospects. Additionally, Fairfax India, backed by Indian-Canadian billionaire Prem Watsa and the largest institutional shareholder, has actively participated in the rights issue. Fairfax had earlier committed $200 million liquidity support to IIFL Finance following the RBI ban, in addition to subscribing to a Rs 500 crore non-convertible debentures issue in March.
Fairfax India holds a significant 15.1% stake in IIFL Finance, further demonstrating its long-term commitment to the company’s success. The RBI’s regulatory measures on March 4, which prohibited IIFL Finance Ltd from disbursing gold loans, have led to strategic capital-raising efforts by the firm, with a focus on rectifying supervisory concerns and driving sustainable growth.
The supervisory restrictions imposed by the RBI are subject to review upon completion of a special audit and subsequent rectification of findings by the company, signaling a proactive approach to addressing regulatory concerns and ensuring compliance within the financial sector.
