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Rural-focused asset finance firm Magma Fincorp has raised ₹ 500 crore from new investors such as Goldman Sachs, Singapore-based Amansa Holdings and the life insurance arms of ICICI Bank and HDFC through a qualified institutional placement (QIP) issue.
With this QIP issue, the promoters’ stake in the company has come down to 24.5 per cent from the pre-issue level of 27 per cent, chief financial officer Kailash Baheti told PTI over phone today, adding the QIP issue was closed last Friday.
The existing investors in the company include the private equity fund TrueNorth with 10 per cent stake, followed by the World Bank arm IFC, ChrysCapital, LeapFrog and KKR with 4.8 per cent stake in the Kolkata firm. KKR had earlier invested around ₹ 236 crore in May 2011.
In the current round of funding the Singapore-based Amansa Holdings has become the largest investor picking up 32 per cent of the issue size, followed by Goldman Sachs India and HDFC Standard Life Insurance at 14 per cent each, ICICI Prudential Life at 12 per cent and the England-based fund DB International Asia at 5.05 per cent, Baheti said.
He said the latest funding will take care of growth capital need of the company, which had a loan book of around ₹ 15,500 crore as of end FY18, for the next three years.
The company draws its maximum business from vehicle financing that includes car and bike financing (both new and old) as well as tractor financing which constitutes around 70 per cent of its loan book, he said.
Affordable housing is the second largest business accounting for 18 per cent of the loan book, followed by the small and medium enterprises (SME) segment which constitutes the rest of the asset book.
When pointed out that many rating agencies have warned that the next wave of bad loans will come from SMEs, he denied any asset quality issue at his portfolio saying, “Our SME book is the best in the industry with a credit loss of only 2 -2.5 per cent.”
“For us the SME book is the best when it comes to asset quality and margins, which is around 9.5 per cent, while our cost of fund is only 9 per cent giving us a return on assets of around 3 per cent and an RoE of around 18 per cent from this book,” he said.
He said after three quarters of negative growth, the company is likely to report around 3 per cent growth in the fourth quarter. It is yet to announce its March quarter earnings.
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