Bajaj Finance To Buy 7% Stake In Firm Engaged In Residential Mortgage-Backed Securities

Bajaj Finance Ltd. will acquire a 7% stake on a fully diluted basis in RMBS Development Co. for an undisclosed amount.

The acquisition is an opportunity to penetrate and support the development of the residential mortgage-backed securities market, the Bajaj Group NBFC said in an exchange filing on Friday.

The shares will be acquired at a face value of Rs 10 per equity share. The all-cash deal will be completed on or before the end of March this year.

Residential mortgage-backed securities are debt-based assets backed by the interest paid on residential loans.

The entity will act as a market intermediary in the segment for the following purposes:

• Facilitating investment/issuance/trade of RMBS.

• Extend credit enhancement (including second-loss credit enhancement) for RMBS transactions.

• Provide liquidity support in the secondary market for RMBS transactions.

• Set up an information repository for RMBS transactions.

• Develop standards and guidelines to ensure the standardisation of RMBS transactions.

• Create securitisation documents for RMBS transactions.

• Leverage a platform to enable price discovery for RMBS transactions, where ecosystem participants come together and finalise the securitisation of RMBS transactions.

• Provide warehouse financing and related advisory and structuring services.

Shares of Bajaj Finance closed 1.54% higher at Rs 6,847.70 apiece on Friday, ahead of the announcement, as compared with a 0.61% advance in the BSE Sensex.