Mahindra Finance Approves Rs 3,000 Crore Rights Issue under Simplified Regulations

Mahindra & Mahindra Financial Services Limited (MMFSL) has approved a fresh resolution for a rights issue of up to Rs 3,000 crore, superseding its earlier February approval to take advantage of SEBI's recently simplified regulations for rights issues.

The Board of Directors of MMFSL met on May 2, 2025, and approved the fund raise through fully paid-up equity shares with a face value of Rs 2 each. The company emphasized that this is not an additional offer but a fresh approval of the same proposal announced on February 13, 2025, now under the new streamlined regulatory framework.

According to the company's regulatory filing, the funds will be used "primarily to maintain a strong capital adequacy ratio keeping in mind Company's growth plans to augment its Assets Under Management (AUM)." The capital raise is expected to enhance Tier 1 Capital by more than 200 basis points, supporting the company's growth aspirations for the next few years.

The decision follows SEBI's March 3, 2025 amendment to the Issue of Capital and Disclosure Requirements Regulations, which has "considerably simplified the Rights issue process thereby making it time, process and cost efficient." The new regulations apply only to rights issues approved after April 8, 2025, necessitating the fresh board approval.

MMFSL has reported strong performance in its secured asset portfolio with an AUM CAGR of 20% over the last 24 months. The company has maintained its gross stage 3 assets below 4% throughout FY25, with credit costs remaining under 2%.

As one of India's leading non-banking finance companies, MMFSL focuses on the rural and semi-urban sector with over 10 million customers and assets under management exceeding USD 14.1 billion. The company provides vehicle and tractor financing, SME loans, and fixed deposits through its network of 1,365 offices reaching customers across 480,000 villages and 8,000 towns.

The record date for determining eligible shareholders, issue price, rights entitlement ratio, and other terms will be decided by the Board or the Rights Issue Committee at a later date.