Adar Poonawalla-controlled Rising Sun Holdings Pvt. has agreed to take over majority shareholding in Mumbai-based non-bank lender Magma Fincorp Ltd.
The transaction will be concluded through a preferential share allotment worth Rs 3,456 crore, according to an exchange filing by Magma Fincorp. The lender would be renamed to Poonawalla Finance.
Magma Fincorp proposes to allot 45.8 crore shares to Rising Sun Holdings, and 3.57 crore shares to Sanjay Chamria and Mayank Poddar, the existing promoters. Rising Sun Holdings will hold 60% stake in the non-bank lender after the transaction is completed, while the current promoter shareholding will come down to 13.3%.
The net worth for the non-bank lender will rise to Rs 6,300 crore, according to the statement.
Poonawalla is also the chief executive officer of Serum Institute of India, the maker of Oxford University-AstraZeneca Covishield vaccine in India. Rising Sun Holdings intends to appoint him as the chairman of the board of the lender, while Abhay Bhutada would continue to work as managing director. Chamria, the filing said, would assume the role of executive vice chairman.
“Strong corporate backing and substantial fund infusion is likely to have a positive effect on the credit rating of the company as well,” the statement said. “This infusion would also enable Magma Fincorp to further invest in its housing finance subsidiary and general insurance joint venture, as required.”
The lender is active in vehicle finance, housing finance, small and medium enterprise lending and the general insurance segments.
CARE Ratings Ltd. holds a AA- rating on Magma Fincorp’s fund-based and non-fund-based facilities from banks and an A+ rating on perpetual debt instruments issued by the company. ICRA Ltd. holds a AA- rating on its long-term debt facilities.
“The group’s portfolio has high proportion of borrowers with relatively moderate credit profiles (first-time buyers, small entrepreneurs, self-employed and non-income proof category) and hence remain vulnerable, especially in the current challenging operating environment,” ICRA had said in a Dec. 8 rating release.
Magma Fincorp In Numbers
- Magma Fincorp reported a consolidated net profit of Rs 12.99 crore for the quarter ended Dec. 31 compared with Rs 22.38 crore a year earlier.
- Assets under management at the end of the third quarter stood at Rs 15,006 crore, down 9.4% from year earlier.
- Stage 3 assets, or those overdue for more than 60 days, stood at 6.9% of the total assets.