CSL Finance Draws Marquee Investors Including Akash Bhanshali, Madhuri Kela

There is a high chance you may have never heard of CSL Finance Ltd. The non-banking finance company provides secured loans and bridge financing to small and medium size companies. It has a market capitalisation of Rs 223 crore after its shares gained nearly 200 percent over the last one year.

But that’s not the reason why the company is in the news.

In a overnight filing on the exchanges, the company said it plans to issue 12.47 lakh shares, at a price of Rs 390 per share, and 1.5 lakh fully convertible warrants on a preferential basis to a group of non-promoter investors. The shares, amounting to 26.6 percent of the expanded equity base, will be issued at a 13 percent discount to Thursday’s closing of Rs 444.90.

Interestingly, the investors include marquee names from within corporate India and the financial market. Akash Bhanshali-owned Aadi Financial, Madhuri Madhusudan Kela, Aditya Parekh, Rohit Kothari’s Kothari Ventures, Gagan Chaturvedi, Ajay Relan and many more high networth individuals (HNIs) have participated in buying these shares and warrants.

Bhanshali, nephew of well-known investment banker Vallabh Bhanshali, leads the principal investment unit at investment firm Enam Holdings Ltd. Kela is the wife of Madhu Kela, an equity markets expert and who till recently was the chief investment strategist at Reliance Capital Ltd.. Relan is a career venture capitalist.

According to the June 30, 2017 filing with the Bombay Stock Exchange, the promoters of CSL Finance hold a 74.79 percent stake in the company. The remaining is with public shareholders including a few institutions such as PTG Consultants and Rajastan Global Securities.

Interestingly, as per Bloomberg data, as of May 31, 2017 the second-largest investor in the company was National Australia Bank, with a 28.35 percent holding. But the bank does not feature on the list of investors holding more than 1 percent as per the latest exchange filing.

Company Financials

As per the latest financials available, the company is trading at a price-to-earnings (PE) multiple of 12.7 times and at a price-to-book multiple of 2.8 times. The company is debt-free but has low return ratios.

The stock has jumped 29 percent in the last one month, with a year-to-date gain of 173 percent.

The return on assets stands at 5.6 percent, return on equity is 6.2 percent and return on capital is 5.7 percent.

CSL Finance’s profits have grown from Rs 4.1 crore in fiscal year 2012 to Rs 16.4 crore in FY 2017, according to BSE filings. Whereas revenues have declined from Rs 231 crore (FY2012) to Rs 40 crore (FY2017). It paid its maiden dividend last year.

BloombergQuint has yet to reach the investors named for their comments on this disclosure.

Shareholding Pattern (As of June 30)

• Promoter: 74.79 percent
• Institutional Holding: Nil
• Current market price: Rs 445
• Shares/warrant issue price: Rs 390
• Issue price at 12.4 percent discount

Key Investors

• Madhuri Kela: 80,000 shares (Rs 3.12 crore)
• Aadi Financial Advisors LLP (Akash Bhanshali): 385,000 shares (Rs 15.01 crores)
• Aditya Parekh: 25,000 shares (Rs 97.5 lakh)

Financials (FY17)

• Income from operations at Rs 40.6 crore
• Net Profit: Rs 16.4 crore
• Total assets under management: Rs 136 crore

Milestones

• 2003: Registered as NBFC
• 2009: Exited Asian Oilfields Services for 7 times return
• 2010: Diversified into secured lending to MSME corporates
• 2015: Invested in fintech company
• 2016: Retail loan foray (Education, Medical and Trader loans)

Update: A previous version of this article erroneously referred to Aditya Parekh as Aditya Deepak Parekh, which has been corrected.