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00:00 Ashok Wadhwa, Group CEO of Ambit, joins in.
00:03 Hi, Mr. Wadhwa, thank you very much for joining us.
00:06 To begin with, you want to walk us through this recent development.
00:09 What is the intent of Daiwa picking up minority stake?
00:12 What is the valuations coming at?
00:15 What are the plans that both you entities have in mind?
00:19 Is it largely for a global client base?
00:21 Is it going to be more local? Walk us through it.
00:24 Last year, about July of 2023, Daiwa had acquired 18% ownership in the holding company, which is Ambit Private Limited.
00:35 That's the merchant banking license, and that's the broad services franchise of Ambit.
00:43 The holding company also owns a subsidiary called Ambit Finvest Private Limited, which is our lending arm, SME lending, largely secured SME lending.
00:53 With this transaction that we signed yesterday, and which is of course subject to customary CPs,
00:59 Daiwa will acquire 15% ownership now directly in the lending business.
01:05 So they have now 18% in the holding company, and they loan 15% directly in the lending business.
01:10 And the idea is that at a time when we think that the lending business has phenomenal potential,
01:16 particularly the secured element, which is the dominant part of Ambit Finvest Private Limited,
01:21 we think additional capital augurs well for the future of the business.
01:27 Reserve Bank has been kind of giving directions to say, "Guys, go raise more capital."
01:33 And to get a large strategic investor like Daiwa from Japan, where we're seeing already significant amount of interest in India,
01:43 I think augurs very well for our business.
01:45 It provides us capital that then gives us the confidence to go out and build the business as aggressively as the opportunity offers at this point of time.
01:54 So that's interesting to find out.
01:56 And we'd love to touch base down the line to see how that pans out as well.
02:00 But while we're speaking to you, I just want some perspective on how you're seeing the space, the lending space for NBFCs.
02:07 We've seen regulatory action and the RBI uncharacteristically cracking the whip in certain specific incidents.
02:16 What do you make of the latest developments and what does that mean?
02:19 What are the implications for the lending space as a whole?
02:24 I think our regulators, both RBI and SEBI, generally are a little worried about unsecured lending,
02:31 particularly unsecured lending for consumer purposes.
02:38 And there's growing concern whether all of this growth in the lending, the retail lending,
02:45 is going exactly for the purpose for which the money is being borrowed or whether a part of it is getting fueled into the markets,
02:52 which is perhaps the concern that our regulator SEBI has in a sense shared with us.
02:59 My own view is that on the asset side, there is a huge opportunity.
03:04 I mean, there's a very large population in tier two, tier three cities that are now yearning to get into the formal borrowing capacity.
03:15 And at the same time, there is clearly more capital that needs to be raised by NBFCs.
03:22 RBI's diktat is focused largely on one segment, unsecured consumer lending.
03:29 They have been otherwise very encouraging of secured lending and lending which is for business purposes, i.e. the classic SME lending with a security.
03:39 So I would like to believe that those of us who are focusing on the secured piece and particularly are lending for business purposes,
03:48 continue to have a phenomenal opportunity to grow the balance sheet,
03:53 and which is why perhaps long term strategic capital will play an important role in trying to capitalize upon that opportunity at this point of time.
04:02 So, Vathwa, share with us the financials of the deal with Daiva and also where is the expansion going to take place?
04:12 You are at the cusp of a breakout in some sense and you're in an industry that's only growing from strength to strength.
04:19 In that context, where is the money that Daiva is going to be investing, going to be used?
04:25 You know, we all came out of a very difficult phase during COVID at a point of time when the focus was really on protecting your balance sheet versus going out and growing your balance sheet.
04:36 All of us have kind of retracted a little from wanting to grow because, you know, collections were under pressure during the COVID period.
04:44 Post-COVID, we've seen a significant demand, particularly from tier two, tier three cities, and we think therein lies the big opportunity.
04:52 Granular growth, classic 15 to 25 lakh loan amounts in tier two, tier three cities, and as I said, largely on the secured part.
05:02 That's where the real focus is. The capital that Daiva is going to invest in Ambit, it's about 420 crores coming in from Daiva and 260 odd crores coming in from existing investors.
05:15 So, in all, we are raising primary capital of almost 670, 680 crores.
05:20 All of that is going to strengthen the balance sheet and allow us to go out and capitalize upon this opportunity, i.e., secured lending in tier two, tier three cities.
05:30 Thanks so much for joining in, giving us that perspective and wish you all the best in what you've planned out.
05:35 Thank you.
05:36 [Music]