Authum commits Rs 406 crore to lift ISARC stake to 95%

Authum committed about Rs 406 crore to India SME ARC’s approximately Rs 414 crore rights issue in Q2 FY27, a transaction expected to increase Authum’s holding from 88.37% to about 95%. The proposed commitment follows ISARC’s first exits and redemptions, which reduced assets under management, or AUM, from Rs 1,913.71 crore in June 2026 to Rs 642.21 crore in September 2026.

How will the ISARC rights issue change Authum’s ownership?

Authum expects its holding in ISARC to rise to about 95% after committing about Rs 406 crore to the ARC’s approximately Rs 414 crore rights issue announced in Q2 FY27. The commitment represents most of the proposed issue and follows Authum’s acquisition of 88.37% of ISARC on June 17, 2025, after receiving the required Reserve Bank of India approval.

The rights issue is a proposed funding step rather than a reported completed investment. Before this issue, Authum had invested about Rs 313 crore in ISARC, including about Rs 193 crore through the primary issuance of fresh shares. ISARC is a subsidiary of Authum, with Authum identified as its sole sponsor in the presentation.

The ownership increase would add to the control obtained in the June 2025 acquisition while directing more capital to the ARC platform. ISARC said it was well capitalised after Authum’s equity infusion and described its platform as fully enabled, with an experienced team and a minimal legacy book. The presentation also said the ARC’s investment in its pre-acquisition legacy book was fully provisioned.

Why did ISARC’s AUM decline after June 2026?

ISARC’s AUM declined because its first exits and redemptions occurred in Q2 FY27, which the company describes as a temporary reduction. AUM fell by Rs 1,271.50 crore from Rs 1,913.71 crore in June 2026 to Rs 642.21 crore in September 2026, while the investment balance declined from Rs 323.11 crore to Rs 258.63 crore.

The change followed a rapid build-up after the acquisition. ISARC’s AUM was Rs 295.70 crore in December 2025, increased to Rs 692.55 crore in March 2026 and then reached Rs 1,913.71 crore in June 2026. The company attributes the subsequent fall specifically to exits and redemptions, rather than identifying a deterioration in the legacy book, which it says is fully provisioned.

At September 30, 2026, ISARC reported a fresh investment book of about Rs 268 crore and AUM of about Rs 642 crore built since the acquisition. The more precise chart figures show Rs 258.63 crore of investment and Rs 642.21 crore of AUM. The presentation says investments are expected to have an average exit cycle of two to three years and that a robust pipeline is being worked on for further closures.

What were ISARC’s latest reported profits and revenue?

ISARC reported profit of Rs 9.70 crore in Q2 FY27, up from Rs 5.30 crore in Q1 FY27, as revenue rose from Rs 6.20 crore to Rs 12.20 crore. Expenses also increased, from Rs 0.90 crore in Q1 to Rs 2.40 crore in Q2, while reported profit increased by Rs 4.40 crore over the quarter.

The latest quarterly profit also exceeded each half-year profit figure shown for FY26. ISARC reported Rs 4.70 crore in profit in FY26 H1 on revenue of Rs 8.50 crore, followed by Rs 7.40 crore in FY26 H2 on revenue of Rs 9.00 crore. Q2 FY27 revenue of Rs 12.20 crore was Rs 3.20 crore above the FY26 H2 figure, although these are different reporting periods.

The quarterly earnings data accompanies the first reported exits and redemptions in Q2 FY27. The presentation does not provide a breakdown of Q2 revenue by investment exit, redemption, management fee or other source. It does show that expenses in Q2 FY27 were below the Rs 3.70 crore reported in FY26 H1, despite revenue reaching the highest figure displayed in the summary statement.

How much has Authum deployed through its credit platforms?

Authum reported cumulative credit deployment of about Rs 8,175 crore from FY24 through September 30, 2026, across its non-banking financial company, or NBFC, and ARC platforms. Of this deployment, Rs 3,696 crore of exposures had been fully exited or closed, while approximately Rs 4,104 crore remained outstanding after partial repayments of about Rs 375 crore in ongoing exposures.

The ISARC rights issue is separate from that cumulative deployment disclosure, but it supports an ARC platform that had built a diversified book through debt acquisitions from multiple banks and institutions. Authum’s reported credit-business results include total profit booked of Rs 2,626 crore on exited or closed exposures during FY24 to September 2026. The presentation ranks exits by multiple of invested capital, or MOIC, with the two highest displayed outcomes at 33.06 times and 5.89 times.

Authum’s stated strategy is to diversify revenue beyond investments through its credit business and to continue capital allocation across investments, strategic investments and credit business. The company frames this as a plan for a judicious mix, not a quantified allocation target. It also says it intends to create multiple independent but synergistic platforms and build management teams aligned with long-term value creation.

Conclusion

The proposed Rs 406 crore commitment would deepen Authum’s ownership of ISARC to about 95% while funding an ARC whose AUM has moved sharply with deal activity. ISARC’s AUM expanded to Rs 1,913.71 crore in June 2026 before first exits and redemptions brought it to Rs 642.21 crore in September, while Q2 FY27 profit reached Rs 9.70 crore.

The next point to watch is completion and effect of the approximately Rs 414 crore rights issue, including the resulting ownership change indicated by management. Investors can also monitor whether ISARC converts its stated pipeline into new closures and how the disclosed two-to-three-year average exit cycle affects investment balances and AUM after the Q2 FY27 redemptions.