Rs 4400 million Investment to Fuel Growth of the Business
MUMBAI, India--(BUSINESS WIRE)--
Magma Fincorp Ltd. ("Magma") today announced an investment of Rs 4400
million led by funds advised by Kohlberg Kravis Roberts & Co. L.P.
(together with its affiliates, "KKR") along with International Finance
Corporation ("IFC"). IFC's investment is subject to the approval of the
Board of IFC, shareholders of Magma and relevant regulatory authorities.
The capital infusion will be used to support Magma's growth plans in
existing businesses in addition to newer areas.
"For this round of capital raise, we have carefully selected partners,
who believe in Magma's business model, people wealth, distribution
franchise and asset quality and are providers of long-term strategic
capital that can support Magma attain the next level of growth.
Maintaining our aggressive growth pattern, we expect to increase our
disbursements by 50% in FY12, reduce our dependency on securitization
and maintain a healthy NIM via greater contribution from higher yielding
products. This transaction is not just about capital but the foundation
of a lasting partnership. KKR and IFC each have a track record of
success in India, as well as a history of working with management and
building world-class enterprises. With this capital infusion, we believe
Magma is well positioned to capitalize on its existing business
opportunities, increase its thrust into new products in addition to
accretive M&A," said Sanjay Chamria, Vice Chairman & Managing Director
"This is a long term investment in Magma, a company led by enterprising
promoters who have built an impressive platform of sound risk management
and credit underwriting capabilities. "We believe that our partnership
will help propel the growth in rural and semi urban segments by
promoting consumer credit, agri lending and corporate lending to small
and medium scale enterprises," said Sanjay Nayar, a Member of KKR and
Head of KKR India.
The International Finance Corporation is a member of the World Bank
Group and is headquartered in Washington. IFC has made several
investments in India across infrastructure, clean energy, agribusiness,
manufacturing, health and education sectors including in the financial
services space. The proposed investment by IFC will provide Magma with
strategic capital and will enable the Company to expand its footprint in
semi-urban and rural areas as well as in Indian states of Bihar, West
Bengal, Orissa, Chattisgarh, UP, Rajasthan etc, thereby contributing to
financial inclusion in India.
Ernst & Young (Advisory) and Wadia Ghandy advised Magma on the
transaction. Ernst & Young (Transaction Advisory), McKinsey & Co.,
Simpson Thacher & Bartlett, AZB Partners and Kotak Mahindra Capital
advised KKR on the transaction.
"We have carefully shortlisted investors who provide long term capital
that can help Magma graduate to the next level and become one of the
biggest players in the country in the next few years" said Rajeev Suneja
from Ernst & Young, advisors to the transaction.
About Magma Fincorp
Magma Fincorp Limited ("Magma") is a non-deposit taking non-banking
finance company (NBFC), registered with the Reserve Bank of India (RBI)
as an Asset Finance Company. The Company, having started operations over
two decades back, is listed on the Bombay Stock Exchange Limited and the
National Stock Exchange in India.
Magma provides a bouquet of financial products including financing of
Utility Vehicles & Cars, Commercial Vehicles, Construction Equipments,
Tractors and SME Loans. Magma has a dedicated base of over 2.36 lac
customers and has assets of Rs. 10,907 crores under management. The
company has 171 branches in 20 states and 1 union territory and employs
about 5,150 people.
Magma has signed a joint venture with HDI Gerling, part of Talanx Group,
Germany's third largest insurance group to start a general insurance
company in India, which since has received R1 license from the insurance
regulator. For additional information, please visit www.magma.co.in.
Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a
leading global investment firm with $61.0 billion in assets under
management as of March 31, 2011. With 14 offices around the world,
including one in Mumbai, KKR manages assets through a variety of
investment funds and accounts covering multiple asset classes. KKR seeks
to create value by bringing operational expertise to its portfolio
companies and through active oversight and monitoring of its
investments. KKR complements its investment expertise and strengthens
interactions with investors through its client relationships and capital
markets platforms. KKR is publicly traded on the New York Stock Exchange
(NYSE: KKR). For additional information, please visit KKR's website at www.kkr.com.
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