India: JM Financial appoints banks for $100m QIP

JM Financial Ltd has started work on its qualified institutional placement (QIP) offering that could see the company raise as much as $100 million, three people aware of the development said.

“JM Financial’s board had last month approved raising of funds through sale of fresh equity shares. Subsequently, the company had been talking to various investment banks for the QIP and they have recently appointed Credit Suisse and IDFC Bank and has started work on the same. They intend to raise almost $100 million (around Rs650 crore),” said one of the three people cited earlier, requesting anonymity as he is not authorized to speak to reporters.

A 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 will soon begin investor roadshows for the proposed QIP, said the person. “They are currently in the process of getting shareholder approval for the fundraise, which should close by the end of the month and then they could look at launching the deal anytime before the end of the quarter,” he added.

According to JM Financial’s stock exchange filings, the company is seeking shareholder approvals for the QIP through a postal ballot, which closes on 29 January.

“The capital is most likely to be used for boosting the balance sheet of the lending businesses of the group,” said the second of the three people cited earlier, also requesting anonymity.

JM Financial had a consolidated loan book of Rs12,365 crore, across real estate, capital market and corporate credit, as of 30 September, according to an investor presentation of the company.

Credit Suisse declined to comment on the development. Emails sent to JM Financial and IDFC Bank did not elicit any response till the time of going to press.

Shares of JM Financial rose 0.78% to Rs168.2 on BSE, while the benchmark Sensex climbed 0.73% to 34,843.51 points.

Last year witnessed record levels of QIP activity, driven by the financial services sector. According to data from primary market tracker Prime Database group, 43 companies raised Rs56,152 crore through the QIP route in 2017, much higher than the previous record of Rs34,675 crore seen in 2009.

The year witnessed large QIP issuances such as those of State Bank of India (SBI) and Kotak Mahindra Bank, which were largest the such offerings ever seen from a public and private sector company respectively.

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

This article was first published on Livemint.com