Shareholders of Magma Fincorp at an extraordinary general meeting of on Tuesday approved the proposed preferential allotment of 49,37,14,286 equity shares of face value Rs 2 each of the company at an issue price of Rs 70 per equity share aggregating up to Rs 3,456 crore, to Rising Sun Holdings and existing promoters, Sanjay Chamria and Mayank Poddar.

The said preferential allotment will result in Rising Sun acquiring controlling stake of 60% in Magma Fincorp. The transaction is subject to necessary regulatory/ statutory approvals, which are under process.

Following the preferential issue, Rising Sun Holdings would be classified as “promoter” of Magma Fincorp. Magma Fincorp and its subsidiaries shall be renamed and rebranded under the brand name “Poonawalla Fincorp”, subject to regulatory approvals. Subsequent to the completion of the preferential allotment, the existing financial services business of Poonawalla Finance is proposed to be consolidated into Magma Fincorp subject to compliance with extant regulations.

Rising Sun Holdings intends to nominate Adar Poonawallaa the chairman of the board of directors and Abhay Bhutada, presently managing director & CEO of Poonawalla Finance, as managing director. Sanjay Chamria would continue as the executive vice chairman of the board.

Mumbai-based Magma Fincorp is a Mumbai-based non-deposit taking systemically important non-banking finance company (NBFC), is registered with the Reserve Bank of India (RBI). Magma offers a bouquet of financial products including commercial finance, agri-finance, SME finance,mortgage finance and general insurance. Magma is focused on the rural and semi-urban sector with a widespread coverage and presence across 21 States 297 Branches.

On a consolidated basis, the company's net profit slipped 42% to Rs 12.99 crore on a 5.4% fall in total income to Rs 596.29 crore in Q3 FY21 over Q3 FY20.