Magma Fincorp will acquire 100% stake in GE Capital’s mortgage business in India for about R1,600 crore, the non-banking finance company (NBFC) said on Thursday. This will mark Magma Fincorp’s foray into the housing finance business. GE Capital is a unit of General Electric.
The Kolkata-based NBFC signed definitive agreements to acquire GE Money Housing Finance (GEMHF) and the entire home equity loan portfolios of GE Money Financial Services (GEMFS), it said.
GEMHF has loan assets of R660 crore, while GEMFS has about R940 crore, the NBFC said. Sanjay Chamria, vice-chairman and managing director of Magma Fincorp, agreed the deal was priced at one time book value of both arms.
?This decision is in line with the strategic realignment of our businesses globally. It is also in line with a decision we took three years ago to exit from mortgage loan business in India,? said Anish Shah, president and chief executive officer, GE Capital India.
GE Capital will continue to focus on growing its commercial finance business and credit card joint venture in India, Shah said. Magma has given a definitive time period of 60 days for completion of the deal, said Sachin Khandelwal, chief executive officer, housing finance business, Magma Fincorp. The transaction closure is subject to standard conditions including relevant regulatory approvals.
?We will be targetting loans with ticket sizes between R15-25 lakh. Out of the R2.4 lakh crore worth housing loan market, this range of ticket sizes constitute about R25,000-30,000 crore,? said Khandelwal.
Magma Fincorp has total assets under management worth R14,650 crore and is present across 250 locations in India, with over 7,000 employees, the company said.
Kohlberg Kravis Roberts (KKR) & Co and International Finance Corp hold significant minority stakes in Magma.
Ambit Corporate Finance was the exclusive financial advisor to Magma during this deal. Udwadia, Udeshi & Argus Partners acted as legal advisors to the NBFC.
Shares of Magma Fincorp ended up 2.37% on the Bombay Stock Exchange, at R67 on Thursday.
