Aditya Birla Capital Invests Rs 500 Crore In Aditya Birla Finance On Rights Basis

Aditya Birla Capital Ltd. has invested Rs 500 crore in Aditya Birla Finance Ltd., its wholly-owned subsidiary, which the company aims to merge with itself.

The investment, made on a rights basis, is aimed at allowing Aditya Birla Finance to "meet its growth and funding requirements and improve its leverage ratio,"  an exchange filing on Thursday stated.

The development comes a week after Aditya Birla Capital said it has received a nod from the Reserve Bank of India to merge Aditya Birla Finance with it. The RBI has accorded its "no objection" for the amalgamation scheme, it said in a regulatory filing on Sept. 18.

The proposed merger received approval from Aditya Birla Capital's board in March this year, with the goal to "create a large unified operating NBFC." The scheme requires approval from the National Company Law Tribunal and other regulatory and statutory authorities.

After the amalgamation comes into effect, Vishakha Mulye, who is the chief executive officer of Aditya Birla Capital, will assume the charge of managing director and CEO of the merged entity. Rakesh Singh, who is currently the MD and CEO of Aditya Birla Finance, will be assigned as the executive director of the merged company.

Shares of Aditya Birla Capital closed 1.29% higher at Rs 236.24 apiece on the NSE, compared to 0.81% rise in the benchmark Nifty 50. Year-to-date, the stock has risen 41.9%.

Out of 10 analysts tracking Aditya Birla Capital, nine have a 'buy' rating on the stock, and one suggests a 'hold', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 12.8%.