Spandana Sphoorty Financial Limited , a prominent player in the financial services sector, has made significant announcements following a recent board meeting. The company has approved a substantial rights issue and faces a credit rating downgrade, marking important developments for its shareholders and financial position.

Rights Issue Approval

The Board of Directors of Spandana Sphoorty Financial has given the green light to a rights issue worth ₹400.00 crore. This corporate action will allow existing shareholders to purchase new shares, potentially strengthening their position in the company.

Key details of the rights issue include:

• Total issue size of ₹400.00 crore
• Record date yet to be announced
• Pending regulatory and statutory approvals as required by applicable laws

The specific terms of the rights issue, including the issue price, rights entitlement ratio, and timing, will be determined by the Board. These details will be disclosed to the stock exchanges in due course.

ICRA Downgrade

In a significant development, ICRA has recently downgraded Spandana Sphoorty Financial and maintained a negative outlook. The downgrade is attributed to the following factors:

• Covenant breaches on ₹1,058.00 crore of Non-Convertible Debentures (NCDs)
• Some waivers for these breaches are still pending

This downgrade could potentially impact the company's borrowing capacity and cost of capital in the near future.

Implications and Next Steps

The rights issue approval signals Spandana Sphoorty Financial's intent to raise capital, which could be used for various purposes such as addressing financial challenges, debt reduction, or strengthening the company's financial position. The timing of this capital raise, coinciding with the credit rating downgrade, suggests that the company may be taking proactive steps to address its financial situation.

Shareholders should stay alert for further announcements regarding:

• The record date for the rights issue
• Specific terms and conditions of the rights issue
• Any updates on the covenant breaches and pending waivers
• Potential strategies to address the concerns raised by ICRA

Investors and stakeholders are advised to keep a close eye on future communications from Spandana Sphoorty Financial for more details on these developments and their potential impact on the company's future prospects.

Spandana Sphoorty Financial , a prominent player in the microfinance sector, has announced plans for a significant capital raise of Rs 750.00 crore. The company is exploring various options, including a potential rights issue, to strengthen its financial position.

Capital Raise Committee Formed

In a strategic move, Spandana Sphoorty Financial has formed a dedicated capital raising committee. This committee will be tasked with exploring and evaluating the most effective methods to raise the targeted Rs 750.00 crore. The formation of this committee underscores the company's commitment to a structured and well-planned approach to its capital raising efforts.

Potential Equity Infusion from Kedaara Capital

A key aspect of this capital raise plan involves the potential participation of Kedaara Capital, the principal shareholder of Spandana Sphoorty Financial. The company is considering an equity infusion from Kedaara Capital as part of its fundraising strategy. This move could signify a vote of confidence from the major shareholder in the company's future prospects and growth plans.

Financial Performance Context

The capital raise initiative comes in the wake of challenging financial results for Spandana Sphoorty Financial. The company reported a substantial net loss of Rs 1,035.00 crore in the previous financial year. Additionally, the gross bad loan ratio stood at 5.63%, indicating some stress in the company's loan portfolio.

Implications and Outlook

This capital raise, if successful, could provide Spandana Sphoorty Financial with the necessary financial resources to address its recent losses and potentially improve its asset quality. The additional capital might also enable the company to:

• Expand its operations
• Invest in technology and infrastructure
• Enhance its competitive position in the microfinance sector

The involvement of Kedaara Capital in this potential rights issue could be seen as a positive signal to other investors, potentially boosting confidence in the company's turnaround efforts.

As Spandana Sphoorty Financial moves forward with its capital raising plans, market observers will be keenly watching the execution of this strategy and its impact on the company's financial health and market position.