Magma Fincorp Limited, backed by PE major KKR, has made its entry into housing finance business with the acquisition of certain affiliates of GE Capital India. Magma will acquire GE Money Housing Finance and the home equity loans portfolio of GE Money Financial Services Private Limited.
GE Money Housing Finance has loan assets worth Rs 660 crore and net worth of Rs 193 crore while home equity loans portfolio of GE Money Financial Services Private Limited has assets worth Rs 940 crore as of March 31.
“This decision (to sell the business) is in line with the strategic realignment of our businesses globally. It is also in line with a decision we had taken three years ago to exit from our mortgage loan business in India” Anish Shah, president and chief executive officer of GE Capital India, said in a statement.
The total asset size comes to Rs 1,600 crore. Magma Fincorp has assets under management of Rs 14,650 crore, and the acquisition would increase it by 13 per cent.
Sachin Khandelwal, former CEO of ICICI Home Finance, joined Magma recently to lead Magma’s housing finance business.
“The company has capital adequacy ratio of about 40 per cent, therefore it won’t need any capital for next two-three years," Khandelwal said.
Sanjay Chamria, Vice Chairman & Managing Director, Magma Fincorp Limited said, “These acquisitions were done at one time book value of Rs 1600 crore and would be partly funded by debt, equity as well as internal accruals.”
“Deal would be closed in next 60 days” he added. Ambit Corporate Finance was the financial advisor to Magma on the above acquisitions.