Magma Fincorp raises Rs500 crore through QIP

Mumbai: Kolkata-based non-banking finance company (NBFC) Magma Fincorp Ltd on Wednesday said it has raised Rs500 crore from institutional investors through a so-called qualified institutional placement (QIP).

Magma provides products such as commercial finance, agri finance, small and medium enterprises (SME) finance and mortgage finance through Magma Housing Finance.

Shares were issued to institutional investors at Rs155 each.

The offering saw participation from investors such as Amansa Holdings Pvt. Ltd, Goldman Sachs India Ltd, HDFC Standard Life Insurance Co. Ltd, ICICI Prudential Life Insurance Co. Ltd and DB International Asia Ltd.

With this, the shareholding of promoters in Magma Fincorp has come down to 24.5% from 27% earlier.

According to Kailash Baheti, chief financial officer of Magma, Singapore-based Amansa picked up 32% of the total QIP issue size, followed by Goldman Sachs and HDFC Standard Life, who picked 14% each, ICICI Prudential Life 12% and DB International 5.05%.

Existing investors in Magma include Indian private equity (PE) firms True North and ChrysCapital, World Bank arm International Finance Corp. (IFC), global private equity major KKR and Co. LP and LeapFrog Investments, which specializes in investments in financial services in Africa and Asia.

According to Baheti, proceeds from the QIP issue will be used by the company for business growth and to enhance capital adequacy ratio.

“Like banks, we also need to have strong capital so that we have the confidence of our lenders, our ratings improve and our capability to lend goes up. With this fund-raise, our capital adequacy ratio goes up from 20% to 25%,” said Baheti.

IIFL Holdings Ltd, Kotak Mahindra Capital Co. Ltd, Edelweiss Financial Services Ltd and Emkay Global Financial Services Ltd managed Magma’s QIP.

Shares of Magma Fincorp closed at Rs169.10, up 0.65%, on BSE, while the benchmark Sensex lost 0.18% to close at 34,331.68 points.