Adar Poonwalla-led firm Rising Star Holdings is planning to acquire controlling stake in financial services company Magma Fincorp via open offer. Rising Star will buy 60 per cent stake in Mumbai based non-banking financial company (NBFC) in a Rs 3,456 crore cash deal. The open offer is subject to receipt of statutory and other regulatory approvals.
Magma Fincorp in an exchange filing said that its board has approved an open offer for issue and allotment of up to 60 per cent equity shares of the company by Rising Sun Holdings Private Limited (RSHPL), together with Sanjay Chamria and Mayank Poddar, through a preferential allotment.
As par the agreement, Magma Fincorp will allot 45.80 crores equity shares to Rising Sun Holdings and 3.57 crore shares to Sanjay Chamria and Mayank Poddar. Post the transaction, Rising Sun Holdings will own 60 per cent stake in the company, and Sanjay Chamria and Mayank Poddar will hold 2.34 per cent stake each.
"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 said.
Post the deal, the net worth of Magma Fincorp will increase to over Rs. 6,300 crore, it added.
Following the completion of deal, Rising Sun Holdings would be classified as the promoter of Magma Fincorp. Besides, Magma Fincorp and its subsidiaries are proposed to be renamed and rebranded under the brand name "Poonawalla Finance". Adding to it, the existing financial services business of Poonawalla Finance is proposed to be consolidated into Magma Fincorp.
Deloitte acted as the sole financial advisor to Magma Fincorp for the deal, while Axis Capital has been appointed as the manager to the open offer.
Commenting on the development, Adar Poonawalla, Director, Rising Sun Holdings Private Limited said, "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 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. This transaction is subject to statutory and regulatory approvals."
Magma Fincorp's board will hold an Extra Ordinary General Meeting on March 9, 2021, for seeking shareholders' nod for issuance of equity shares on preferential basis to RSHPL and others.