JM Financial's NBFC unit to raise $90 mn from GIC, other investors

Singapore sovereign wealth fund GIC Pte Ltd and other investors are injecting Rs 650 crore ($90 million) into a non-banking finance unit of JM Financial Ltd.

Mumbai-listed JM Financial said in a stock-exchange filing unit JM Financial Credit Solutions Ltd is raising a total of up to Rs 875 crore. This includes Rs 225 crore that JM Financial is investing in the subsidiary.

The filing didn't name the external investors. However, multiple media reports said the investors include GIC, former Citigroup CEO Vikram Pandit, the University of California Endowment fund and hedge fund Falcon Edge.

JM Financial Credit is raising the funds at a post-money valuation of up to Rs 7,175 crore, the filing said. JM Financial itself is valued around Rs 7,450 crore, according to stock-exchange data.

The fundraise comes at a time when NBFCs are under pressure amid fears that they are facing a cash crunch. The concerns have risen after Infrastructure Leasing & Financial Services (IL&FS) defaulted on its debt this month, sparking a sell-off in shares of NBFCs and mortgage lenders.

Vishal Kampani, managing director at JM Financial Group, said the fundraise is in line with the group's aim to be "conservatively leveraged" and "maintain strong liquidity cushion".

JM Financial holds a 50.01% stake in the NBFC. Its stake will reduce to 47.05% after the capital infusion. However, it will continue to retain board and management control of the unit.

The fundraise is subject to completion of customary conditions.

Pandit is already a shareholder in JM Financial and held a 1.4% stake in the company at the end of June, stock-exchange data show. He had first bought a stake in JM Financial in 2013 and then separately invested in the company's real estate lending arm the following year.

JM Financial said the latest fundraise takes the total equity capital the group has mobilised this year to Rs 1,379 crore.

In February, JM Financial had raised Rs 650 crore through a qualified institutions placement to support the long-term capital requirements and financial needs of the group.

JM Financial Asset Reconstruction Company Ltd had raised Rs 79.4 crore from external investors in 2018, according to the disclosure.

The financial services group's businesses include investment banking, wealth management and securities business, mortgage lending, distressed credit and asset management business.

JM Financial Credit provides loans to real estate developers. As on 30 June, its net worth was Rs 1,756 crore and its loan book stood at Rs 8,475 crore.

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