Rising Sun Holdings to acquire controlling stake in Magma Fincorp

Rising Sun Holdings (RSHPL), a company controlled by Serum Institute of India CEO Adar Poonawalla, has agreed to acquire a controlling stake in Magma Fincorp, non-banking financial company based in Mumbai.

The transaction will be through for preferential issue of equity shares of Magma Fincorp and an open offer in accordance with the public announcement made under guidelines of SEBI (substantial acquisition of shares and takeovers).

The preferential allotment is for a total of INR 34.56 billion ($470 million). This will be subject to the approval of shareholders and receipt of other regulatory approvals.

Magma Fincorp is engaged in providing loans, mortgage finance, and general insurance.

Rising Sun Holdings to acquire controlling stake in non-banking financial company Magma Fincorp. Photo courtesy of Pete Linforth from Pixabay.

Adar Poonawalla – Director, Rising Sun Holdings said: “I am excited at this opportunity to infuse majority capital for controlling stake of Magma Fincorp.

“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.”

As part of the deal, Magma Fincorp will allot 45.8 million shares to Rising Sun Holdings, and 3.5 million shares to the former’s vice chairman and managing director Sanjay Chamria and the former’s chairman Mayank Poddar.

The preferential allotment will be equivalent to a 64.68% stake in Magma Fincorp.

Under the current shareholding, Rising Sun Holdings will own a stake of 60% in Magma Fincorp, while the stake of the existing promoter group will come down to 13.3%, post-issuance.

Magma Fincorp’s net worth will move up to more than INR 63 billion ($860 million), post the issuance.

Sanjay Chamria said: “Considering the positives in the deal by way of huge capital infusion, strong brand value and ability to attract top notch talent, the Board of the Company has rightly decided to accept an offer for a substantial equity infusion into the Company.

“This would help in propelling the Company into a higher growth trajectory, benefiting from potential lower cost of funds, improved credit rating and with additional leveraging of the huge distribution network, will eventually improve the overall RoE. We are proud to be associating with one of the country’s finest & reputed business groups, and hope to together take the Company to new heights.”