Rs 3,088 Crores Mahindra Finance Rights Issues Scheduled for Launch on July 28, 2020

Non-banking financial company, Mahindra Finance is gearing up to enter the market on July 28 with their rights issues worth Rs 3,088.82 crores. The shares, with a face value of Rs 2 each, will be available for Rs 50 apiece.  Mahindra Finance will issue 61.78 crore equity shares to raise the desired volume of capital funds from the market.

The rights issues will be allotted to the existing eligible shareholders, as per the record date of July 23, at a ratio of 1:1, that is, for each existing share of Mahindra Finance, the shareholder is eligible to subscribe for one rights issue.

The company is a leading name in the segment of financing new and pre-owned auto and utility vehicles with a primary client focus on rural and sub-urban India. The company offers loans for tractors, cars, commercial vehicles, and utility vehicles, including three-wheelers. During the first quarter of the current financial year ending in June, Mahindra Finance has registered a standalone profit of Rs 156 crore, which is significantly higher than its last year’s profit from the same quarter.

Mahindra Finance is the second non-banking financial organisation to hit the market with rights issues. Earlier this month, Shriram Transport Finance Company (STFC), a competitor from the same segment, has also launched rights issues to fortify its balance sheet. Mahindra is also trying to shore up its balance sheet to battle the crisis caused by the pandemic outbreak. A company release reads that the funds raised from M&M Finance rights issue will go towards meeting debt obligations in repaying or pre-paying some of the high-cost debts along with augmenting company’s long-term capital and resource requirements to fund business growth.

So far, Mahindra Finance is doing well even as COVID-19 has dented performance of many businesses. The company has recorded a growth in its profit during the first quarter of the current year and also improved its net NPA (stag 3) from 6.27 percent last year to 5.72 percent.

Mahindra Finance rights issue, the subscription will remain open from July 28 to August 11.  The company has termed it has ‘Mini Bonus’ for its shareholders since the shares are released at a hefty discounted rate – 67.5 percent discount on an ex-right quote of Day One. After the issue, the current paid-up capital of Mahindra will stand enhanced at Rs. 247.11 crores from the current level of Rs 123.55 crores.

The issue will be jointly managed by Kotak Mahindra Capital Co. Ltd., Axis Capital Ltd., BNP Paribas, Citigroup Global Markets India Pvt. Ltd., and SBI Capital Markets Ltd.; along with HDFC Bank Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., ICICI Securities Ltd., and Nomura Financial Advisory and Securities (India) Pvt. Ltd. Kfin Technologies Pvt. Ltd. will work as the registrar for the proposal. It could be a lucrative offer for investors to subscribe for Mahindra Finance rights issues.