Viji Finance allots warrants but issue shrinks as three investors drop out
The nano-cap NBFC raised ₹24.78 cr via warrants, down from planned ₹35.70 cr; dilution of over 60% looms.
What's new
- Viji Finance allotted 8.85 cr convertible warrants at ₹2.80 each, raising ₹24.78 cr.
- Issue downsized from 12.75 cr warrants as three investors backed out.
- 19 non-promoter allottees participated; upfront subscription of ₹6.19 cr received.
Why this matters
For a ₹56-cr market cap NBFC, the ₹24.78 cr infusion roughly doubles the equity base. But the drop of three investors accounting for 3.90 cr warrants signals weak confidence. The resulting dilution of over 60% will pressure earnings per share unless the capital is deployed effectively.
What we're watching
- Whether the warrants get converted within 18 months, determining actual capital infusion.
- Deployment of proceeds to boost lending or acquisitions.
- Market reaction given the reduced issue and dilution.
The full read
Viji Finance, a nano-cap NBFC with a ₹56-cr market cap, just raised ₹24.78 crore via convertible warrants. But the headline number masks a reduction: the issue was trimmed from ₹35.70 crore because three investors walked away from 3.90 crore warrants. The 8.85 crore warrants, priced at ₹2.80 each, carry an upfront payment of ₹6.19 crore and the balance due within 18 months. Nineteen non-promoter allottees stepped in, but the dropped investors are a confidence crack. Post-conversion, dilution exceeds 60%, a steep price for capital. For a company with trailing ROE of just 0.8%, the deployment of these funds will determine whether this raise is a lifeline or a burden.
Questions answered
- Why was the warrant issue reduced?
- Three investors—Vicky R. Jhaveri HUF, Rajesh Nanubhai Jhaveri HUF, and Harsha Rajesh Jhaveri—dropped out, accounting for 3.90 cr warrants, cutting the total from 12.75 cr to 8.85 cr warrants.
- What is the dilution impact of these warrants?
- Post-conversion, the new shares will exceed 60% of the existing equity, significantly diluting current shareholders. The exact dilution depends on conversion timing.
- How much cash has the company received so far?
- The upfront subscription of 25% amounts to ₹6.19 crore. The remaining 75% (₹18.59 crore) is due upon conversion within 18 months.
- Who participated in the warrant allotment?
- Nineteen non-promoter allottees, including Manoj Chhaganlal Rathod (1 crore warrants) and Ashik D Sanghvi HUF (75 lakh warrants). No promoter subscribed.
- What is the lock-in for the warrants?
- The converted shares will be subject to applicable lock-in requirements under SEBI ICDR regulations, typically locking in promoter and non-promoter stakes for specified periods.
- Is this capital raise positive for the company?
- The ₹24.78 cr infusion roughly equals 44% of market cap and can boost the capital base for lending. However, the investor dropout and massive dilution temper the positive.