Adar Poonawalla's Rising Sun Holdings notifies CCI about Magma Fincorp deal

Adar Poonwalla-led Rising Star Holdings Private Ltd (RSHPL) has filed a combination notice with the Competition Commission of India (CCI) about its 60 per cent stake acquisition in financial services company Magma Fincorp Ltd.

As part of the deal, RSHPL will acquire 60 per cent stake in Magma Fincorp, while the non-banking financial company's promoter Sanjay Chamria and Mayank Poddar will acquire 4.68 per cent shareholding.

The acquisition will enable RSHPL to achieve higher efficiencies in its existing businesses in the financial lending space as well as expand and diversify its operations in other business areas where Magma Fincorp is present, the notice said.

RSHPL is a private limited company, primarily engaged in making investments, leasing property on rent and information sharing/business referencing. It is a part of Poonawalla's Rising Sun group of companies.

RSHPL is present in financial services sector through its subsidiary Poonawalla Finance Private Limited, which is a systemically important non-deposit taking non-banking finance company (NBFC).

RSHPL is also engaged in business activities in relation to the provision of rental accommodation, production of hygiene products, exhibiting art and cultural artifacts, and providing management consultancy services through its subsidiaries and associate entities.

Magma Fincorp is also a systemically important non-deposit taking NBFC. Along with its subsidiaries and joint ventures, it offers a bouquet of financial products including commercial finance, agri finance, SME finance, mortgage finance and general insurance with focus on the rural and semi-urban sectors.

Also read: Adar Poonawala firm Rising Sun to buy 60% stake in Magma Fincorp for Rs 3,456 crore

RSHPL said the proposed combination will not have any appreciable adverse effect on competition in India.

In February,  Magma Fincorp had said it will allot 45.80 crore equity shares to RSHPL and 3.57 crore shares to Chamria and Poddar. Post the transaction, RSHPL 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 had said.

Post the deal, the net worth of Magma Fincorp will increase to over Rs. 6,300 crore, it had added.  Following the completion of deal, RSHPL 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.

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.

Also read: Magma Fincorp to raise up to Rs 3,000 crore in FY22