Blackstone, the largest alternative asset manager in the world, will invest ₹5,000 crore (about $535 million) in IIFL Finance Ltd for a 16% stake on a fully diluted basis. The investment, announced on Tuesday, is part of a ₹6,414-crore capital raise. This move aims to strengthen IIFL's balance sheet and expand its lending operations. This transaction is one of the largest private equity investments in a listed Indian non-banking financial company (NBFC).
Key Details
The investment will be made through compulsorily convertible preference shares (CCPS). These will convert into equity shares at ₹602 each within 18 months of allotment. IIFL Finance founder Nirmal Jain expressed excitement about Blackstone's involvement. He called it a strong endorsement of the company's franchise. Jain and co-promoter R. Venkataraman will invest around ₹1,200 crore to keep their combined holding at about 25%.
Background
The capital infusion is expected to significantly boost IIFL Finance’s capital adequacy ratio. It is projected to rise from about 17% to 30% on a pro forma basis by September 2026. This additional capital will support IIFL's growth in secured lending, especially in gold finance. It may also improve credit ratings and lower borrowing costs over time. The shares of IIFL Finance closed 0.5% lower at ₹626.65 after the announcement. Meanwhile, the Nifty 50 index ended 0.2% higher.
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The investment is likely to improve IIFL Finance's stock performance. It may enhance investor confidence in the NBFC sector. The capital raise could lead to increased lending capacity and potentially lower borrowing costs, which would benefit the financial services sector overall.
Investors will watch for the completion of the capital raise. They will also look for any impact on IIFL Finance's credit ratings and stock performance.
Based on reporting by: moneycontrol.com, livemint.com