Aditya Birla Capital jumps after investing Rs 750 crore in subsidiary

Shares of Aditya Birla Capital Limited (ABCL) traded over 2 percent higher to Rs 178 in early trade on September 27 after the company announced an investment of Rs 750 crore on a rights basis, in the equity shares of Aditya Birla Finance Limited (ABFL), a wholly owned material subsidiary of the company.

“ABCL said that it is making the investment in ABFL to meet its growth and funding requirements and improve its leverage ratio”, the company said in an exchange filing on September 27.

At 9:37 am, the stock was trading at Rs 178.5, up 2.2 percent from the previous close on the NSE.

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Meanwhile, on Monday, ABFL announced its first public issue of non-convertible debentures (NCDs) for an amount up to Rs 1,000 crore with an option to retain oversubscription up to Rs 1,000 crore for a total amount of up to Rs 2,000 crore.

The issue will open on Wednesday, September 27 and the allotment of NCDs shall be made, in consultation with the designated stock exchange and on a first-come, first-serve basis, it said.

The company has proposed to utilise at least 75 percent of the net proceeds of the issue towards onward lending, financing and repayment of interest and principal of existing borrowings of the company and a maximum of up to 25 percent of the net proceeds towards general corporate purposes.

Non-convertible debentures are long-term debt instruments issued by companies that carry a fixed interest rate for the investment tenor. The issuer redeems these at maturity and is not eligible for conversion into equity shares at maturity.

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