Shares of Magma Fincorp hit 5 per cent upper circuit in opening deals on Bombay Stock Exchange on fund raising plan. The shareholders of the company on Tuesday approved plan to raise up to Rs 3,456 crore by issuing preference equity shares to Adar Poonawalla-led Rising Sun Holdings Ltd (RSHPL) and two members from the promoter group.
Boosted by the development, shares of Magma Fincorp opened higher at Rs 134 against previous closing price of Rs 129.95. In opening trade, the stock got locked in its 5 per cent upper circuit limit at Rs 136.40 on BSE. Meanwhile, the BSE benchmark Sensex was trading 197 points or 0.39 per cent higher at 51,223.
There was surge in buying as 9.21 lakh shares changed hands over the counter as compared to two-week average volume of 5.71 lakh shares on the BSE.
In an exchange filing on Tuesday, Magma Fincorp said the members of the company approved with requisite 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 March 9.
The company will allot 45,80,00,000 preferential shares to RSHPL for a consideration of Rs 3,206 crore. Besides, Sanjay Chamria and Mayank Poddar (both members of the promoter and promoter group company) will be allotted 1,78,57,143 shares and 1,78,57,143 shares respectively for Rs 125 crore each.
Last month, Adar Poonwalla-led firm Rising Star Holdings had signed deal to buy 60 per cent stake in Mumbai based non-banking financial company (NBFC) for Rs 3,456 crore. The open offer is subject to receipt of statutory and other regulatory approvals.
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. 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.