There is a huge void in the non-banking financial space, said Adar Poonawalla, Chief Executive Officer of the Serum Institute of India. Poonawalla controlled Rising Sun Holdings proposes to acquire a controlling stake in Magma Fincorp via a preferential allotment for an aggregate value of Rs 3,456 crore.

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“The way I look at it is there is a huge void in the non-banking financial companies (NBFCs) and the financial services space. Magma has got a good mix of kind of retail book that we want – we don’t want to lend to real estate and corporates and these big-ticket loans where we have seen things don’t work out so well – and combined that with excellent promoters, with a great track record who has built a fantastic business for more than 25 years, there are very few deals of that nature which has the full package like this. That is why we chose them.”

The formalities will be done in roughly about three-four months’ time.

“Rough timeline is about three months for the RBI and Securities and Exchange Board of India (SEBI) approvals because after that we have to trigger open offer after the shareholders’ agreement and all that. So three-four months, it all depends on the regulators.”

Speaking about the eventual game plan with Magma Fincorp, he said, “The merger would take a lot of time. This is a preferential allotment and we will have to do an open offer as well. Rising Sun Holdings – which is a direct subsidiary of mine and 100 percent owned by me personally – will be doing this. Poonawalla Finance will cease to exist because the joint application that will be made is to surrender the license for lending that Poonawalla Finance has been doing with the Reserve Bank of India (RBI) so that Magma becomes the only entity that I am more than 25 percent in.”

The new company could be named either Poonawalla Financial Services or Poonawalla Finance, he said.

“After three-four months we will apply for a name change with the brand name of Poonawalla, it will either be Poonawalla Financial Services or Poonawalla Finance. It is all subject to the RBI approvals.”

On the fintech part, he added, “The technology that we already have built-in Poonawalla Finance will be a great thing that we will move over. I don’t think we will have to acquire anymore fintech companies.”

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(Edited by : Ajay Vaishnav)

First Published:Feb 11, 2021 1:26 PM IST