Promoters, JM Financial Group, Vikram Pandit and GIC of Singapore, along with the California University Endowment Fund have decided to infuse Rs 8.75 billion into JM Financial Credit Solutions through an equity infusion, valuing the largely residential realty focused NBFC at Rs 71.75 billion.
This is the second round of equity infusion into the city-based company this year, taking the total to Rs 13.80 billion. In February, JM Financial Credit Solutions had raised around Rs 505 crore from external investors.
In May this year, JM Financial Credit Solutions had issued its maiden NCD issue worth Rs 7.50 billion.
"JM Financial has entered into a subscription and shareholders' agreement with JM Financial Credit Solutions and existing investors for a primary equity infusion of up to Rs 8.75 billion," JM Financial said in a statement Thursday.
The new round of growth capital will increase networth by 50 per cent and further strengthen the balance sheet. It will also develerage the balance sheet from 3.8 times gearing to 2.1 times, and bringing down consolidated debt/equity ratio to 2.7 times.
Of the total equity infusion of Rs 8.75 billion, around Rs 4.35 billion will come from Vikram Pandit and Associates and GIC of Singapore, while FM financial will pump in Rs 225 crore and the rest will come from the University of California Endowment Fund, which is a long-only fund, sources told PTI.
Pre-infusion, the non-deposit-taking non-banking finance firm that was valued at Rs 63.00 billion.
"We have continuously endeavoured to diversify our funding sources in this group company through a public issue of bonds in May 2018. The group has successfully raised Rs 13.79 billion worth of equity funds till date in 2018" managing director of JM Financial Group Vishal Kampani said.
JM Financial Credit Solutions was incorporated in November 2014 and ex-Citibank chief executive Vikram Pandit along with GIC hold 49.9 per cent stake in the largely residential real estate focused financier. The rest is with the Kampanis-run JM Financial group.
Sources said with this private placement of shares, there will not be any changes in the present equity holding of the company which has a loan book of a little over Rs 85.00 billion. The source said its loan book is clipping at over 25 per cent now.
In February 2018, JM Financial had successfully raised Rs 6.50 billion through a QIP issue to support the long-term capital requirements and financial needs of the group. In addition, the group had also raised equity funds of Rs 7.29 billion from external investors in its group companies to further strengthen their balance sheets.
JM Financial said it will continue to retain board and management control of the NBFC, which had a networth Rs 17.56 billion as of the June quarter.