Cloverdell Investment Ltd and HDFC Standard Life Insurance Company will together invest ₹178 crore in non-banking finance company Capital First Ltd through a preferential allotment of equity shares.

Cloverdell Investment, an affiliate of private equity firm Warburg Pincus, will invest ₹128 crore in the company that specialises in lending to small and medium enterprises against property.

Capital First, in a statement, said the allotment will take place at ₹153.80 per share. Consequently, Cloverdell will get 83.6 lakh equity shares and HDFC Standard Life Insurance Company 32.5 lakh shares for its ₹50-crore investment.

“Post this transaction, the total Tier-1 capital of the company on a consolidated basis will increase to ₹1,298 crore. The total capital of the company, including Tier-1 and Tier-2, will increase to ₹1,791 crore,” the company said.

“We will deploy the funds in growing our lending to SMEs. This gives us a freeway to grow our business at 30 per cent for the next few years,” said V Vaidyanathan, Chairman and Managing Director, Capital First.

After the transaction, the NBFC’s capital adequacy ratio will increase to 24 per cent from 21.35 per cent as on December 2013. This capital will be adequate for the next 18 months, Vaidyanathan said.

The Mumbai-based company also said promoter shareholding will remain at 71.99 per cent of its total paid-up capital post-allotment. HDFC Standard Life will hold about 4 per cent of the total paid-up capital.

The company needs shareholders’ approval for the stake sale and has called for an extraordinary general meeting on March 28.

The shares of Capital First closed at ₹147 share, up 1.48 per cent on the Bombay Stock Exchange.

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