Adar Poonawalla-Led Firm To Buy 60% Stake In Magma Fincorp

On Tuesday, Non-banking finance company Magma Fincorp states, its shareholders have approved the company's plan to raise up to 3,456 crore by issuing preference equity shares to Adar Poonawalla-controlled Rising Sun Holdings (RSHPL) and two members from the promoter group.

The members of the company agreed with essential majority the preferential issue of 49,37,14,286 equity shares to RSHPL, Sanjay Chamria and Mayank Poddar at the extraordinary general meeting (EGM) held on Tuesday (March 9), Magma states in a regulatory filing. Promoter shareholding is slated to be changed to Poonawalla group as per the deal declared earlier this year, will allot 45, 80, 00,000 preferential shares to RSHPL for a consideration of 3,206 crore.

Besides, Sanjay Chamria and Mayank Poddar, will be allotted 1, 78, 57,143 shares and 1, 78, 57,143 shares respectively for 125 crore each.

Chamria is the Vice Chairman and Managing Director of the Kolkata-headquartered NBFC.
The transaction would result in the Rising Sun Holdings taking a controlling stake of 60 per cent in the post issue capital of the company.

With this capital infusion, Rising Sun Holdings would also be classified as promoter of the company, together with the existing promoter group. The existing promoters will hold 13.3 per cent stake post issuance of preferential shares.
The net worth of the company will increase to over 6,300 crore post the issuance.

"The preferential allotment represents 64.68 per cent of MFL's enhanced equity share capital post the issue. Based on current shareholding, Rising Sun Holding would hold 60 per cent stake in the entity post-issuance and the existing promoter group stake would get reduced to 13.3 per cent post-issuance," the company states.

Besides, Rising Sun Holdings will nominate Poonawalla as the chairman of the board, while Abhay Bhutada, presently MD and CEO of Poonawalla Finance is proposed to be appointed as the Managing Director, while Chamria will continue on the board as the executive vice chairman.

Also, Magma Fincorp and its subsidiaries will be renamed and branded under the Poonawalla Finance brand. And the existing financial services business of Poonawalla Finance is proposed to be associated.

Adar Poonawalla, Director, Rising Sun Holdings Private Limited states, "I am excited at this opportunity to infuse majority capital for controlling stake of Magma Fincorp. I see unlimited potential in India in the financial space as our economy is poised to grow in double digits and these ties in with our group philosophy of serving the needs and dreams of the nation, and financial service plays an important role in supporting and fuelling the growth of our country. This transaction is subject to statutory and regulatory approvals. Now we will work towards getting regulatory approvals and completing statutory formalities so that the transaction can be consummated quickly.”