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Financial services group JM Financial Ltd (JMFL) and a clutch of existing investors have entered into agreements to make an equity infusion of up to ₹875 crore in JM Financial Credit Solutions Ltd (JMFCSL), a NBFC. The investment values the company at ₹7,175 crore.
Foreign investors
The investors include former Citigroup CEO Vikram Pandit, and the Government of Singapore Investment Corporation (GIC) with an equity infusion of ₹435 crore; JM Financial is investing about ₹225 crore. The rest is from foreign funds, including the University of California Endowment Fund, sources said.
At present, 49.9 per cent in JMFCSL is held by Pandit and GIC, and the remaining by JM Financial.
In a release issued earlier in the day, the company said that the pre-money equity valuation of JMFCSL stood at ₹6,300 crore.
Vishal Kampani, managing director, JM Financial Group, said, “The fund raise is in line with our philosophy to be conservatively leveraged and maintain strong liquidity cushions within the JMFL Group. We have continuously endeavoured to diversify our funding sources in JMFCSL through a public issue of bonds in May 2018.”
Kampani also said that “the group has raised ₹1,379 crore in equity till date.”
Potential for growth
The equity infusion will increase JMFCSL’s networth by 50 per cent and strengthen its balance sheet, enabling it to meet growth requirements. JMFL will continue to retain board and management control of JMFCSL, and the NBFC will function as JMFL’s subsidiary following the infusion.
This year, the JMFL Group has raised ₹1,379 crore. In February, JMFL raised ₹650 crore through a Qualified Institutional Placement to support its long-term capital requirements and financial needs.
Balance sheet
Additionally, the JMFL Group raised equity funds of ₹729 crore from external investors in group companies to strengthen their balance sheets and capitalise on business opportunities.
As of June 30, JMFCSL had a net worth of about ₹1,756 crore.
JMFL’s share price, which hit an intra-day high of ₹95.55, closed 5.30 per cent down at ₹87.60 on the BSE.
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