Vikram Pandit's RM 3000 Crore Exit from JM Financial Credit Solutions
Vikram Pandit exits real estate financing business, sells 49% stake in JM Financial Credit Solutions to Nimesh Kampani's JM Financial for Rs 3,000 crore
Vikram PanditJm Financial Credit SolutionsNimesh KampaniReal Estate FinancingNbfcReal Estate MumbaiJul 07, 2024
Pandit will subsequently step down from the chairman’s position of the mid-tier NBFC. The move will increase JM Financial’s stake in JMFCS to 96% from 47%. The balance 4% is held by Moraine Master Fund and Aparna Aiyar, the wife of Pandit’s business partner Hariharan Aiyar. Hariharan too will step down from the board of JMFCS following the change in shareholding.
JM Financial, a financial services company founded by Nimesh Kampani, has been restricted from managing debt issues as well as offering loans against shares by regulators due to governance lapses. However, the company will buy 43% from INH Mauritius for Rs 1,282 crore in the first phase of the transaction. It will finance the deal through internal accruals which stands at over Rs 4,000 crore.
INH is exiting JMFCS as the fund’s life is getting over, sources said. It first bought into JMFCS in fiscal 2015 and later acquired more shares in 2017 and then again in 2018, investing a total of Rs 950 crore in the NBFC. JMFCS marked Pandit’s first investment in India’s financial services sector. Pandit also holds 1.2% in the listed JM Financial.
The deal valuation of Rs 3,000 crore is lower than JMFCS’ net worth of Rs 4,200 crore. This is because there has been under-recoveries in real estate financing and the same hasn’t been provided in the books. The under-recoveries are a result of stress on developers, said sources.
Separately, JMFCS will buy 72% in an asset reconstruction company from JM Financial for Rs 856 crore. The move will increase JMFCS’ stake in JMFARC to 82% from 10%.
Frequently Asked Questions
How much will JM Financial pay to buy 43% stake in JMFCS?
Rs 1,282 crore
What is the deal valuation of JMFCS?
Rs 3,000 crore
Why is INH Mauritius exiting JMFCS?
The fund's life is getting over
How much stake will JMFCS have in JMFARC after the deal?
82%
Who will step down from the board of JMFCS following the deal?
Vikram Pandit and Hariharan Aiyar
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