Mahindra & Mahindra Financial Services (Mahindra Finance), a subsidiary of Mahindra & Mahindra, has opened its Rights issue for subscription for its existing shareholders on July 28.
The Rights issue will close on August 11, 2020, i.e. the last day for submission of application form.
Kotak Mahindra Capital Company, Axis Capital, BNP Paribas, Citigroup Global Markets, HDFC Bank, HSBC Securities and Capital Markets (India), ICICI Securities, Nomura Financial Advisory and Securities (India) and SBI Capital Markets are the lead managers to the Rights issue.
Here are 10 key points to know before subscribing the issue:
1>> Number of Shares: The company will issue 61,77,64,960 fully paid-up equity shares of face value of Rs 2 each for cash.
2>> Issue Price: The Rights issue price has been fixed at Rs 50 per share (including a premium of Rs 48 per equity share).
3>> Terms of Payment: The full amount of the issue price will be payable at the time of submitting Application Form.
4>> Amount To Raise: Mahindra Finance plans to raise Rs 30,88,82,48,000 (or Rs 3,088.8 crore) via its rights issue from its eligible equity shareholders.
5>> Rights Entitlement Ratio: Rights equity shares will be offered in the ratio of one equity share for every one equity share held by eligible shareholders on the record date that is July 23.
6>> Trading Begins in Rights Entitlement: The trading in Rights Entitlement (RE) has begun along with issue opening today. The Rights Entitlement shares opened at Rs 88.40 on the BSE against intrinsic value of Rs 78.85 (which arrives after subtracting Rights issue price from previous closing price of M&M Financial). Trading volumes in RE stood at 1.86 lakh shares on the BSE and 9.59 lakh shares on the NSE. Eligible shareholders can either sell or buy more shares in the Rights Entitlement trading during the issue opening period.
7>> Market Renunciation: Investors can renounce or transfer their Rights Entitlements from the issue opening date, till August 7 in case of on-market transaction, while renunciation through off-market transfer should be completed in such a manner that the Rights Entitlements are credited to the demat account of the Renouncee on or prior to the issue closing date.
8>> Objects Of Issue: The funds raised through the issue will be used towards repay/prepaying certain outstanding borrowings of the company, augment long term capital and resources for meeting funding requirements for business activities and for general corporate purposes.
9>> Company Profile: Mahindra Finance is one of the leading deposit taking non-banking finance companies in the rural and semi-urban markets of India with over 25 years of operating experience. The company is engaged in providing financing for new and pre-owned auto and utility vehicle, tractors and commercial vehicles. Mahindra Finance also provides housing finance, financing to SMEs and offers fixed deposits.
Subsidiaries and Associates: Its subsidiaries and associates are Mahindra Insurance Brokers (which provides broking solutions to individuals and corporates and undertakes broking of life, non-life and reinsurance products), Mahindra Rural Housing Finance, Mahindra Finance CSR Foundation, Mahindra Manulife Investment Management (which is the asset management company of Mahindra Manulife Mutual Fund), and Mahindra Finance USA LLC (which is a joint venture company provides wholesale inventory-financing to dealers and retail-financing to customers in the United States for purchase of Mahindra tractors and utility vehicles).
10>> Financials: In quarter ended June 2020, profit grew by 127.8 percent year-on-year to Rs 155.8 crore and net interest income increased by 8.7 percent to Rs 1,375.9 crore, while operating profit rose by 44.2 percent YoY to Rs 1,044.7 crore, but disbursements were down 67.1 percent YoY at Rs 3,489 crore and the weakness in disbursements was the highest ever in a quarter.
Company did higher securitization to reduce the cost of borrowing, with securitised book rising 95.3 percent YoY to Rs 17,596 crore, while assets under management at Rs 81,436 crore rose 14.05 percent YoY and loan book increased 2.3 percent YoY to Rs 63,840 crore in June quarter.Spreads at 7.3 percent for Q1FY21 were lowest in last 16 quarters, while gross non-performing assets increased to 9.19 percent (highest in 8 quarters) against 8.44 percent at the end of March quarter.