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Ria Jain made post

Why did Bajaj Finance not participate in the preferential offer of RBL Bank? What does that mean for the stock of RBL Bank?

Answer
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Anu Biswas answered.
8 months ago


The reason Bajaj Finance could not participate in the preferential offer of RBL Bank is more of a minor technical issue. The current SEBI regulations stipulate that any shareholder who has sold shares in the last 6 months will not be permitted to participate in the preferential issue of a company. Since Bajaj Finance is heavily into the business of loans against shares (LAS), there have been occasions when they would have had to sell shares of RBL Bank due to clients not being able to repay the loan against the pledged shares. The current regulations don’t make any exception for LAS related investments and hence Bajaj Finance would not have technically qualified to participate in the preferential offer of RBL Bank. However, it may be noted that Bajaj Finance did participate in the QIP offer for Qualified Institutional Players. So Bajaj Finance has participated in RBL Bank, albeit from a different route. Hence that should not be much of a worry for RBL Bank as the issue is more technical in nature.


user profile image
Anu Biswas answered.
8 months ago


The reason Bajaj Finance could not participate in the preferential offer of RBL Bank is more of a minor technical issue. The current SEBI regulations stipulate that any shareholder who has sold shares in the last 6 months will not be permitted to participate in the preferential issue of a company. Since Bajaj Finance is heavily into the business of loans against shares (LAS), there have been occasions when they would have had to sell shares of RBL Bank due to clients not being able to repay the loan against the pledged shares. The current regulations don’t make any exception for LAS related investments and hence Bajaj Finance would not have technically qualified to participate in the preferential offer of RBL Bank. However, it may be noted that Bajaj Finance did participate in the QIP offer for Qualified Institutional Players. So Bajaj Finance has participated in RBL Bank, albeit from a different route. Hence that should not be much of a worry for RBL Bank as the issue is more technical in nature.