Financial services group JM Financial said on Saturday it has decided to consolidate the holdings of its wholesale debt syndications and non-performing loan businesses onto a single platform.
The combination is aimed at leveraging JM Financial Group’s expertise to achieve higher risk-adjusted returns and move towards a diversified syndication model.
“The board of directors meeting held today has approved the acquisition of 42.99 per cent equity stake in JM Financial Credit Solutions Ltd by JM Financial Ltd for approximately Rs 1,282 crore,” the company said in a statement.
Further, the board also approved “JMFCSL to acquire 71.79% equity stake in JM Financial Asset Reconstruction Co. from JMFL for a consideration of Rs 8,560 crore.”
Following the transaction, JMFL’s stake in JMFCSL will increase from 46.68% to 89.67% and JMFCSL’s stake in JMFARC will increase from 9.98% to 81.77%.
The proposed transactions will result in a net cash outflow of about Rs 4,260 crore from JMFL, which will be funded from excess cash.JM Financial said both the transactions are expected to close within three to six months, subject to necessary regulatory, shareholder and other approvals.
“The proposed transaction will align our corporate and capital structures and provide us with greater flexibility to optimize capital allocation and profit distribution to shareholders,” Vishal Kampani, non-executive vice chairman, JM Financial, said.
“We foresee significant long-term growth opportunities for our business and are well positioned to capitalize on evolving market conditions,” Campani said.
