Shares of Magma Fincorp are locked in 10% upper circuit and hit a fresh high of Rs. 93.55 in Thursday's (February 11, 2021) deal as Adar Poonawala led company eyes controlling stake in the firm. On February 10, Rising Sun Holdings, a company backed by Serum Institute of India's CEO Adar Poonawalla announced to acquire a controlling stake in the NBFC.
The transaction shall be carried out through a preferential issue of Magma Fincorp's equity shares worth Rs 3,456 crore. Besides the deal as per SEBI norms, the deal includes an open offer.
Post the preferential allotment of shares, Rising Sun Holding will be the promoter entity of Magma Fincorp. Also, MFL and its subsidiaries shall be rechristened and rebranded under the brand name "Poonawalla Finance", subject to regulatory approvals.
Also, the current financial services business of Adar Poonawalla shall be consolidated into MFL subject to compliance with extant regulations. Deloitte Touche Tohmatsu India LLP is acting as the exclusive financial advisor to MFL, Wadia Ghandy & Co is acting as legal advisor, and Vinod Kothari & Co is acting Corporate law advisors to the company.
According to an official statement, the deal "is subject to shareholders' and other regulatory approvals and represents 64.68 percent of MFL's enhanced equity share capital post the issue. Based on current shareholding, Rising Sun Holding would hold 60 percent stake in the entity post issuance and the existing promoter group stake would get reduced to 13.3 percent post issuance. The net worth of MFL shall increase to over Rs 6,300 crore post the issuance."
At 11:14 am, the stock was locked at 10% upper circuit at Rs. 93.55 per share on the NSE.