Bajaj Finance to raise ₹17,500 crore via QIP and warrants to Bajaj Finserv

Bajaj Finance's board has approved a massive capital-raising plan of up to ₹17,500 crore, combining a ₹11,700 crore institutional share sale and a ₹5,800 crore warrant issue to its parent company, Bajaj Finserv.

The announcement comes after a challenging month on the stock market for the major non-banking financial company (NBFC). Bajaj Finance shares have fallen by around 10 per cent over the past month, closing at ₹949.35 on the BSE on 1 October, just before Indian markets closed for the Gandhi Jayanti holiday.

Both companies confirmed the decisions following board meetings held on 1 October. The capital injection is designed to strengthen the lender's balance sheet as it continues its aggressive credit expansion, though the new share issuance raises the prospect of equity dilution for existing retail investors.

What are the details of the ₹17,500 crore raise?

The fundraise will be split into two distinct structures. The first is a Qualified Institutions Placement (QIP) of up to ₹11,700 crore. This will involve issuing new equity shares of face value Re 1 each to qualified institutional buyers.

The second leg is a preferential issue of convertible warrants worth up to ₹5,800 crore. These warrants will be allotted exclusively to Bajaj Finserv, the promoter and holding company of the lender. Bajaj Finserv currently holds a 51.30 per cent stake in Bajaj Finance.

The pricing of both the QIP and the warrants will be determined at a later stage by the board or a specially appointed committee, but the company has confirmed it will not price them below the floor limits set by the Securities and Exchange Board of India (Sebi).

Why is Bajaj Finance raising capital now?

The capital buffer is expected to support Bajaj Finance's strong balance sheet growth. The company has reported rapid scaling in recent years, with its turnover rising from ₹46,938.80 crore in financial year 2024 to ₹69,850.79 crore in financial year 2026.

Despite the scale of the fundraise, Bajaj Finserv stated that its investment is not driven by any immediate capital shortfall at the subsidiary. Instead, the parent company said its participation is intended to show its long-term support and commitment, which it hopes will "lend confidence" to other institutional investors looking at the QIP.

How will the warrants work?

Under the terms of the preferential allotment, Bajaj Finserv must pay at least 25 per cent of the total consideration upfront when the warrants are allotted. The remaining 75 per cent will be due as and when the warrants are exercised and converted into equity shares.

The parent company has an 18-month window from the allotment date to convert these warrants. If it fails to exercise its option within this period, the upfront money paid to Bajaj Finance will be forfeited. Once converted, the new shares will rank on par with the lender's existing fully paid-up equity shares.

What is next for shareholders?

The capital raise cannot go ahead without formal approval from the company's investors. Bajaj Finance has announced it will convene an Extraordinary General Meeting (EGM) to seek shareholder backing for both the QIP and the preferential warrant issue.

If approved, the preferential warrant allotment is expected to be wrapped up within 15 days of the special resolution being passed. Investors will be keeping a close eye on the QIP's pricing to gauge the extent of the near-term dilution of their holdings.