Fusion Finance backers plan Rs 550 cr rights issue, management rejig to fight loan book stress
Fusion Finance, Warburg Pincus and Creation Investments are planning to recapitalise the country’s youngest microfinance company via a Rs 550-crore rights issue to strengthen its balance sheet as the firm’s provisions for the September quarter are expected to surpass earlier forecasts by up to 58%.
Fusion Finance is also initiating a search for a new chief executive to strengthen its senior management bandwidth as part of a larger corporate initiative to improve the asset quality of the loan book, top officials said.
“We want to be more proactive rather than be more organic in terms of handling this issue,” Fusion Finance founder Devesh Sachdev told ET.
Even as the company’s capital adequacy ratio (CAR) of around 26% is well above the 15% mark mandated by the banking regulator, the management said it wants to maintain one of the strongest balance sheets in the industry. Fusion Finance’s net worth is Rs 2,800 crore.
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