Classic Leasing & Finance Ltd (BSE: CLAL.BO), a non-banking financial company (NBFC) with a legacy in asset financing and structured lending, has approved a preferential allotment of equity shares worth up to ₹92.5 million. This strategic move signals the company’s intent to strengthen its capital base, attract new investors, and potentially unlock fresh growth avenues in a competitive financial landscape.
Key highlights from the announcement:
1. The Board of Directors has formally approved the issuance of equity shares on a preferential basis, aggregating up to ₹92.5 million
2. The allotment will be made to select investors, subject to shareholder approval and compliance with regulatory norms under SEBI’s ICDR guidelines
3. The proposed issue aims to bolster the company’s Tier-I capital, improve its debt-to-equity ratio, and enhance its lending capacity
Strategic rationale behind the move:
Classic Leasing & Finance has been recalibrating its business model to align with evolving credit demand, especially in the MSME and vehicle leasing segments. The infusion of fresh equity will allow the company to:
- Expand its loan book and diversify its asset classes
- Invest in digital infrastructure and risk management systems
- Meet regulatory capital adequacy requirements more comfortably
- Improve its credit rating and reduce borrowing costs
The preferential route offers a faster and more targeted capital raise mechanism compared to public offerings, enabling the company to onboard strategic investors who may bring not just funds but also domain expertise and long-term alignment.
Investor implications and governance safeguards:
The company has assured that the preferential issue will be executed in accordance with SEBI’s pricing formula, ensuring transparency and fairness. Additionally, the Audit Committee and Independent Directors have reviewed the proposal to safeguard minority shareholder interests.
The equity shares issued will be locked in for a period as mandated by SEBI, and the company has committed to disclosing the identity of allottees and post-issue shareholding patterns in its regulatory filings.
Market snapshot:
- Current share price: ₹14.90
- Market capitalization: ₹15.5 crore
- Promoter holding: Approximately 60 percent
- Sector: Non-Banking Financial Services (NBFC)
- Registered office: Mumbai, Maharashtra
Growth outlook and sectoral context:
The NBFC sector in India has witnessed renewed investor interest following regulatory reforms and improved asset quality across the board. With rising demand for credit in Tier-II and Tier-III cities, companies like Classic Leasing are well-positioned to tap into underserved markets.
The ₹92.5 million equity infusion could serve as a launchpad for the company to scale operations, introduce new financing products, and deepen its reach in semi-urban geographies. Moreover, the move comes at a time when interest rates are stabilizing, and liquidity conditions are improving, making it an opportune moment to raise capital.
Next steps and timeline:
- Shareholder approval to be sought via an Extraordinary General Meeting (EGM)
- Regulatory filings to be submitted to BSE and SEBI
- Allotment expected to be completed within the current financial quarter
- Post-issue disclosures to include utilization roadmap and impact on financial metrics
Conclusion:
Classic Leasing & Finance’s decision to raise ₹92.5 million through a preferential equity issue marks a pivotal step in its capital restructuring journey. As the company gears up for expansion and modernization, this move could enhance its financial agility and investor appeal. Stakeholders will be watching closely for execution timelines, investor profiles, and the strategic deployment of funds.
Sources: BSE India, SEBI filings, Classic Leasing & Finance Ltd official disclosures, Moneycontrol, Economic Times
