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Non-banking finance company Magma Fincorp plans to raise Rs 440 crore by selling 27.75 per cent stake to private equity firm Kohlberg Kravis Roberts and International Finance Corporation.
The Kolkata-headquartered NBFC will sell 4.98 crore equity shares at Rs 88 a share. This works out to a premium of Rs 86 on a share having face value of Rs 2.
Kohlberg Kravis Roberts (KKR) will pick up 14.95 per cent stake or 2.68 crore shares for approximately Rs 236 crore and International Finance Corporation (IFC) will pick up 12.8 per cent stake or 2.3 crore shares for approximately Rs 202 crore.
After the stake sale, the promoters' share will reduce from 41.63 per cent to 30.08 per cent.
The funds would be used to shore-up the NBFC's capital and to meet its growth needs, said Mr Sanjay Chamria, Vice-Chairman and Managing Director.
The company is targeting a growth of 50 per cent in disbursements and net interest margin of around 5 per cent in the current fiscal.
“The capital infusion will help capital adequacy to remain above 15 per cent and to grow the balance sheet. With this kind of capital infusion the dependence on securitisation will go down significantly,” Mr Chamria said.
Capital adequacy ratio after the infusion of capital would be around 25 per cent, said Mr V. Lakshmi Narasimhan, Chief Financial Officer, Magma. Currently, it is around 18 per cent.
As on March 31, 2010, disbursements were at Rs 5,415 crore and assets under management were Rs 10,907 crore.
With the rising interest rates, cost of borrowing could increase and there could be pressure on margins in the current fiscal, Mr Chamria said. Borrowing cost is currently 9.3-9.4 per cent.
“Due to the lag effect of rising interest rates, we are able to pass on only some of the rising cost of borrowing,” Mr Chamria said.
Fund raising for NBFCs also got tougher after the RBI removed the priority sector status for bank loans to NBFCs, in its annual monetary policy, earlier this month.
Shares of Magma Fincorp closed at Rs 74.95, up 8 per cent from the previous close of Rs 69.40, on the BSE on Monday.
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