Regency Fincorp plans Rs 312 crore raise for acquisitions

Regency Fincorp Limited plans an approximately Rs 312 crore preferential issue to fund a fully owned digital-lending acquisition, a majority stake in a gold-loan company, further lending and corporate purposes. Management said Rs 100 crore to Rs 125 crore could fund the digital transaction and up to Rs 75 crore the gold-loan investment, subject to approvals and completion.

What will Regency Fincorp use the preferential issue for?

Regency Fincorp plans to use the proposed issue for two acquisitions, onward micro, small and medium enterprise lending and general corporate purposes. Its board approved the proposal on October 16, 2026, at approximately Rs 312 crore, although management described the proposed amount as approximately Rs 313 crore during the October 26 earnings call.

Management said the two proposed acquisitions could use more than Rs 200 crore of the planned proceeds. The remaining capital is intended for the existing MSME and digital-lending businesses and corporate purposes, which management said could include branch expansion and a hub-and-spoke digital-lending model beyond its Noida operation.

The planned raise follows substantial expansion in Regency Fincorp's lending book. Assets under management, or AUM, were Rs 610.25 crore at September 30, 2026, while first-half FY27 total income was Rs 49.87 crore and profit after tax, or PAT, was Rs 16.30 crore.

How would Regency Fincorp acquire a digital lender?

Regency Fincorp intends to buy a digital-lending company or platform outright for Rs 100 crore to Rs 125 crore, making it a 100% owned business. Management said the transaction would be completed in stages rather than through a single payment and could take three to nine months.

Management said its internal metrics review for one digital-lending target had been completed, but independent-auditor due diligence was still under way. It said the third-party target was reporting about Rs 2 crore of monthly profitability, while Regency Fincorp was assessing the sustainability of that profit, the AUM and the quality of the assets.

The target acquisition is separate from Regency Fin Technology, the subsidiary that management said has built technology infrastructure for digital lending over the preceding nine to 12 months. Management said the subsidiary arrangement involved a nominal fee and no revenue-sharing model, while the proposed acquisition is an arm's-length transaction with a third party.

Regency Fincorp already operates the CashMySalary platform, which disbursed Rs 125 crore in H1 FY27 and had more than 87,000 active loans across 15,000 PIN codes in 25 states. It also launched JetFund for salary advances and personal loans of Rs 20,000 to Rs 1 lakh, with management targeting Rs 50 crore to Rs 55 crore of JetFund AUM by the end of FY27.

What stake would Regency Fincorp take in a gold-loan business?

Regency Fincorp plans to acquire a majority stake of more than 50%, rather than full ownership, in one gold-loan company. Management said it was evaluating two potential targets and expects to deploy up to Rs 75 crore, with a transaction period of three to four months subject to approvals and completion.

An independent auditor and a chartered-accounting firm were reviewing the potential businesses, including asset quality and expected growth, according to management. Regency Fincorp did not name either target, disclose a valuation or state that a definitive agreement had been signed.

Management said the acquisition would establish a gold-backed lending vertical and support its intended secured-lending mix. The secured loan book was Rs 452 crore at September 2026, up from Rs 60.50 crore a year earlier, while management has said it aims to keep 70% to 75% of the overall portfolio in secured lending.

The company reported gross non-performing assets of 0.99% and net non-performing assets of 0.75% at September 2026. Management targets gross non-performing assets below 1.25% and net non-performing assets below 1%, and said its secured MSME book uses a 60% loan-to-value ratio.

How would the issue affect Regency Fincorp's capital and funding?

Management expects Regency Fincorp's net worth to rise from Rs 190 crore to Rs 290 crore by March 2027 following the preferential issue. It further expects net worth to reach Rs 615 crore by March 2028 once the entire preferential issue has been fully paid up.

At September 30, 2026, Regency Fincorp had outstanding borrowings of Rs 505 crore, a capital adequacy ratio of 28.55% and debt-to-equity of 2.66 times. During H1 FY27, it raised around Rs 425 crore through non-convertible debentures and term loans to support lending growth.

Management said none of the preferential-issue proceeds would be used to repay lenders because portfolio cash flows would service existing debt. It said it aimed to keep leverage below 3.5 times net worth, with a more conservative internal range of about 3 to 3.2 times.

The blended cost of funds was 12.35% at the time of the call, compared with 13.5% at the beginning of FY27. Management targeted a range of 10.75% to 11.25% by FY27-end, saying a larger equity base could help it seek additional lower-cost funding lines.

What targets has Regency Fincorp set for FY27?

Regency Fincorp is targeting AUM of Rs 900 crore to Rs 950 crore by the end of FY27 and PAT of Rs 40 crore to Rs 42 crore or higher. The AUM target was revised after the company reached Rs 610.25 crore by September 2026, having previously expected to reach about Rs 600 crore only by the end of FY27.

H1 FY27 total income rose 164% year on year to Rs 49.87 crore, while PAT increased 146% to Rs 16.30 crore. Management said both figures had surpassed their respective FY26 full-year levels, and net interest margin rose to 7.54% from 3.51% in H1 FY26.

Management said the two acquisitions would not necessarily contribute equally in FY27. The digital-lending acquisition could add revenue after completion, whereas the gold-loan business may make a limited contribution in the current financial year and a greater contribution in the following year.

Conclusion

Regency Fincorp's proposed preferential issue would direct more than Rs 200 crore towards a fully owned digital-lending business and a majority-owned gold-loan operation. The transactions would broaden a portfolio that had Rs 610.25 crore of AUM at September 2026, while retaining management's stated focus on a 70% to 75% secured-lending mix.

The next items to watch are independent due diligence, required approvals and staged completion of the digital transaction within three to nine months, followed by the proposed gold-loan deal within three to four months. Management's March 2027 net-worth expectation of Rs 290 crore, FY27 AUM target of Rs 900 crore to Rs 950 crore and PAT target of Rs 40 crore to Rs 42 crore will indicate execution progress.