Looks like VV moved faster than I thought on the fund raise. Literally within 2 weeks since my original post on a possible fundraise.
There’s been a lot of debate about the fundraise: Why now ? Why this much ? etc etc.
Let me speculate on this
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I think he wanted to raise less, Warburg and ADIA pushed him to do more. Why? because if they can get hold of more shares now, and they are confident in his ability to deliver, then WHY not. So he must have gone with a 3-4K crores proposal and they scaled it up and said 7-8K crore
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The contrary is that he could have walked away. But other interested investors may not have offered the 60/- conversion Price for their offer of the 3-4K crores QIP and it may have been much lower specially because MFI credit losses are still going to hit him in Q4 FY25. They would have been thinking if he gets desperate we will get a better price.
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So VV goes back and tells Warburg pincus , Ok i will do 7-8K crores but only at 60/- . Why ? This gives him a talking point that the fund raise is above book value (which is 53/-) and it is non dilutive based on book value. Also - even if Q4 is bad, which he is already broadcasting, he can front load more of the losses using the fresh equity raise and blend the good news to say we have done the fund raise and now we are good for 3-4 years. The focus goes away from the MFI cycle.
This helps him manage the Q4 results and investor call . Then he puts in all the effort to get Q1 right, which is highly likely ebcause
a) RBI has lowered repo rates
b) RBI has lowered risk weights on unsecured loans to NBFCs
c) more liquidity in the system which brings down his deposit costs
So he has playbook from Q1 FY26 onwards .
Discl: Invested since last couple of years, watching for much longer