By IANS,
Chennai : The Board of city-based non-banking finance company (NBFC) Cholamandalam DBS Finance Ltd (Chola DBS) is planning to raise Rs.100 crore from the International Finance Corporation (IFC) by issuing fresh equity.
The NBFC will issue 10,893,852 equity shares of Rs.10 each at Rs.92 per share on a preferential basis.
“The transaction is expected to close this May after the approval of IFC’s Board, our shareholders and regulatory authorities. Normally IFC is a long-term investor and the company needs growth capital at regular interval. Hence, we decided on IFC,” N. Srinivasan, director-in-charge, told IANS Monday.
Once the transaction is completed, IFC’s holding in the company will be around 9.9 percent, he said.
According to Srinivasan, the company will also convert the 30,000,000, one percent fully convertible cumulative preference shares (FCCPS) of Rs.100 each before September 2010.
Post Capital infusion by IFC, and conversion of the preference shares, Chola DBS’ net worth will be close to Rs.900 crore and the promoters will continue to hold 74.9 percent stake in the company.
Asked about the strategy to grow the business after the exit of DBS Bank, he said: “We have to grow the business. Mortgage business is known to us. We will be chalking out our strategies shortly.”
The Murugappa group last month announced its decision to buyout DBS Bank’s 37.48 percent stake in Chola DBS (24,888,473 equity shares of Rs.10 each) at Rs.91 per share.
Group company Tube Investments of India Ltd will also invest Rs.150 crore in Chola DBS by subscribing to its one percent FCCPS of Rs.100 each.