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Magma Fincorp announced that CARE Ratings has placed the company's long / short term bank facilities ratings (CARE AA-/ CARE a1+) on watch with developing implications.
CARE Ratings has given the following rationale for the same:
CARE is of the view that pursuant to announcement of proposed preferential issue of equity shares of the
Company to Rising Sun Holdings (RSHPL), a company controlled by Adar Poonawalla of
The Cyrus Poonawalla Group. The preferential allotment proposed is for an aggregate value of Rs.3,456 crore
and as part of the transaction the Company proposes to allot 45,80,00,000 shares to RSHPL and 3,57,14,286
shares to Chamria and Poddar. Post preferential issue, RSHPL would hold 60% stake in the Company.
The proposed capital infusion would be a positive for the group's capitalisation profile. The above transaction
is subject to various regulatory approvals and CARE would continue to monitor the developments in this
regard and will take a view on the ratings once the transaction is completed and impact on the credit risk
profile of the Company including future business strategy is clear.
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