Magma Fin up 5% as shareholders approve share issue to Poonawalla-led firm

The shareholders have approved the company's plan to raise up to Rs 3,456 crore by issuing preference equity shares to Adar Poonawalla-led firm

Shares of Magma Fincorp rose 5 per cent to hit a new high of Rs 136.40 on the BSE in intra-day trade on Wednesday after the company on Tuesday informed that its shareholders have approved the plan to raise up to Rs 3,456 crore by issuing preference equity shares to Adar Poonawalla-controlled Rising Sun Holdings Ltd (RSHPL) and two members from the promoter group.

The members of the company approved with the requisite majority the preferential issue of 493.7 million equity shares to RSHPL, Sanjay Chamria and Mayank Poddar at the extraordinary general meeting (EGM) held on Tuesday, March 9, Magma said in a regulatory filing.

The said preferential allotment would result in RSHPL, a company controlled by Adar Poonawalla, acquiring a controlling stake of 60 per cent in Magma Fincorp. The transaction is subject to necessary regulatory/statutory approvals, which are under process, it said.

After the infusion of capital, Magma and its subsidiaries will be renamed and rebranded as 'Poonawalla Finance'. Subsequent to the completion of the preferential allotment, the existing financial services business of Poonawalla Finance is proposed to be consolidated into Magma Fincorp subject to compliance with extant regulations.

Last month, post the acquisition announcement, rating agencies ICRA and CARE Ratings had placed the rating of Magma Fincorp’s long-term fund-based term loans on watch with developing implication. The company had also received a communication from ACUITE whereby the rating of the company’s unsecured subordinated redeemable non-convertible debentures was placed under watch with positive implication.

ACUITE said the expected equity infusion of Rs 3,456 crore in the company will strengthen the capital position of Magma and its subsidiaries in a very significant manner which in turn will help to enhance its business profile over the medium term. The proposed capital infusion would be a positive for the group's capitalisation profile and would provide capital for both absorbing losses, as well as fund growth, over the medium term, the rating agency ICRA said.

The stock of the non-banking finance company today surpassed its previous high of Rs 131.95 touched on March 4, 2021. In the past two months, it has zoomed 219 per cent as against a 3.8 per cent rise in the S&P BSE Sensex. The stock hit an all-time high of Rs 194 on May 22, 2018.Magma Fincorp rises 5% on shareholders' nod to share issue to Poonawalla-led firm

Shares of Magma Fincorp rose 5 per cent to hit a new high of Rs 136.40 on the BSE in intra-day trade on Wednesday after the company on Tuesday informed that its shareholders have approved the plan to raise up to Rs 3,456 crore by issuing preference equity shares to Adar Poonawalla-controlled Rising Sun Holdings Ltd (RSHPL) and two members from the promoter group.

The members of the company approved with the requisite majority the preferential issue of 493.7 million equity shares to RSHPL, Sanjay Chamria and Mayank Poddar at the extraordinary general meeting (EGM) held on Tuesday, March 9, Magma said in a regulatory filing.

The said preferential allotment would result in RSHPL, a company controlled by Adar Poonawalla, acquiring a controlling stake of 60 per cent in Magma Fincorp. The transaction is subject to necessary regulatory/statutory approvals, which are under process, it said.

After the infusion of capital, Magma and its subsidiaries will be renamed and rebranded as 'Poonawalla Finance'. Subsequent to the completion of the preferential allotment, the existing financial services business of Poonawalla Finance is proposed to be consolidated into Magma Fincorp subject to compliance with extant regulations.

Last month, post the acquisition announcement, rating agencies ICRA and CARE Ratings had placed the rating of Magma Fincorp’s long-term fund-based term loans on watch with developing implication. The company had also received a communication from ACUITE whereby the rating of the company’s unsecured subordinated redeemable non-convertible debentures was placed under watch with positive implication.

ACUITE said the expected equity infusion of Rs 3,456 crore in the company will strengthen the capital position of Magma and its subsidiaries in a very significant manner which in turn will help to enhance its business profile over the medium term. The proposed capital infusion would be a positive for the group's capitalisation profile and would provide capital for both absorbing losses, as well as fund growth, over the medium term, the rating agency ICRA said.

The stock of the non-banking finance company today surpassed its previous high of Rs 131.95 touched on March 4, 2021. In the past two months, it has zoomed 219 per cent as against a 3.8 per cent rise in the S&P BSE Sensex. The stock hit an all-time high of Rs 194 on May 22, 2018.