Adar Poonawalla- Rising Sun Holdings Pvt Ltd and two other individuals — Sanjay Chamria and Mayank Poddar — proposed an open offer to purchase an additional 26% stake in Magma Fincorp for over ₹1,391 crores.
“The open offer is to acquire up to 19,88,32,105 equity shares, constituting 26% of the expanded voting share capital at a price of ₹70 apiece. The total consideration would be a little over ₹1,391.82 crores,” as per the regulatory filing. Axis Capital has been assigned as the manager of the offer.
On 10 February, the Poonawalla group and Magma Fincorp said in a joint statement that Rising Sun Holdings would acquire a 60% stake in the Magma Fincorp by subscribing to a ₹3,456-crore preferential issue.
As part of the deal, Magma Fincorp (MFL) will designate 458 million shares to Rising Sun Holdings and 35 million shares to Sanjay Chamria and Mayank Poddar for ₹250 crores, Magma and Poonawalla Finance said. Chamria is the vice-chairman and managing director of Magma Fincorp. Poddar is the chairman emeritus and a non-executive director of the Kolkata-based company.
The preferential allotment exemplifies 64.68% of MFL’s enhanced equity share capital after the issue. Rising Sun Holdings will carry 60% in the entity post-issuance, and the existing promoter group stake will get curtailed to 13.3%. The net worth of MFL will increase to over ₹6,300 crores, the statement said. This equity capital infusion will enable Magma to further invest in its housing finance subsidiary and general insurance joint venture.
After the infusion of capital, Magma and its subsidiaries will be renamed and rebranded Poonawalla Finance. Also, the prevailing financial services business of Poonawalla Finance will be centralized into Magma. Adar Poonawalla will become the board’s chairperson, and Abhay Bhutada, presently the managing director and chief executive of Poonawalla Finance, will be the managing director of the merged entity after the deal. Chamria will continue on the board as the executive vice-chairman
“I see an unlimited potential in India in the financial space as our economy is poised to grow in double digits, and this 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,” Poonawalla, director, RSH said earlier.
The promoter and promoter group presently holds 24.39% in Magma. Its Asset Under Management (AUM) stood at ₹15,006 crores at the end of December 2020. Magma’s scrip closed 5 percent higher at ₹113.45 apiece on BSE on Wednesday.