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PE-backed Magma Fincorp acquires Religare Finvest’s auto lease business

Backed by KKR and IFC, Magma Fincorp has also completed a transaction to acquire GE Capital India’s housing finance and home equity loan business.

Magma Fincorp Ltd (MFL) has acquired the Rs 250 crore auto lease business portfolio from Religare Finvest, a subsidiary of Religare Enterprises Ltd (REL). The firm, however, did not disclose the financial details of the transaction.

The news comes coupled with the completion of the previously announced acquisition of GE Money Housing Finance (GEMHF), an affiliate of GE Capital India and engaged in the housing finance business in the country.

Sanjay Chamria, vice-chairman and managing director of Magma Fincorp, said, “The acquisition will significantly help our fledgling auto lease business that we have recently launched. With this acquisition, Magma has got over 80 large corporate houses with more than 4,500 individual car customers. It will help expand its bouquet of offerings.”

With this move, Magma will establish itself not only as a serious car finance player for the corporate sector but will also cater to that sector’s requirements for other assets like IT systems, hardware and equipment, added Chamria. The company will also provide working capital loans as part of its SME offerings and expand its franchise.

In November 2012, Magma Fincorp signed definitive agreements for the acquisition of 100 per cent equity share capital of GE Money Housing Finance. That acquisition will also help Magma Fincorp gain access to around 10,000 existing customers. The total loan portfolio is estimated at Rs 1,320 crore, which also includes the home equity portfolio of GE Money Financial Service Pvt Ltd.

Kolkata-based NBFC Magma’s entry into the housing finance space is an extension of its existing business that revolves around financing of utility vehicles, cars, commercial vehicles, construction equipment, tractors and SME loans. It is backed by the private equity giant KKR and also by IFC, the private sector investment arm of World Bank.

(Edited by Sanghamitra Mandal)

Magma Fincorp Ltd. (formerly known as Magma Shrachi Finance Ltd.) is a non-banking finance and consumer finance company. It offers commercial vehicles finance, cars and utility vehicles finance, construction and strategic construction, equipment finance, tractor finance, small and medium-sized enterprise loans, suvidha (refinance), housing loans and insurance services. It provides equipment and vehicle financing services to individuals and small business houses. The company service portfolio includes commercial vehicle finance, construction equipment finance, car and utility vehicle finance, strategic construction equipment finance, tractor finance, small and medium enterprise loans etc. The company was founded in 1989 and is based in Kolkata, West Bengal.

(Kohlberg Kravis Roberts and Co.)

KKR India Advisors Pvt. Ltd. is a private equity firm with $101.6 billion assets under management. It provides growth capital to companies operating in Asia Pacific, EMEA and United States of America. The firm seeks to invest in logistics, energy, finance, pharmaceuticals, food and beverages, manufacturing, retail, healthcare, media, telecom technology, infrastructure and real estate sectors. The company was founded in 1976 and is based in New York with additional offices in Mumbai, London, Paris, Dubai, Hong Kong, Singapore and Sydney.

GE Capital is one of four major units of General Electric. GE Capital is comprised of five sub-units - GE Aviation Financial Services, GE Commercial Finance, GE Energy Financial Services, GE Money (merged with GE Consumer Finance), and GE Treasury. At one time, GE Capital was the financial services unit of General Electric and was headed by a single person. The unit, later split into four divisions, and was responsible for a large portion of GE revenue. Each of the businesses that was a part of GE Capital were run independently and rolled up only to the Chairman of GE, Jeff Immelt. Other businesses formerly considered to be a part of GE Capital, such as Healthcare Finance, Railcar Finance, etc. were incorporated into the corresponding Industrial Businesses as support functions.

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