Poonawalla Fincorp stated that the transaction would result in a pre-tax profit of Rs 351.85 crore. Additionally, increase its capital adequacy ratio from the existing 52.2 per cent to 56.1 per cent.
Poonawalla Fincorp announced on Tuesday that it will divest its direct and indirect shareholding in the general insurance company, Magma HDI. The company stated the board, after evaluating all alternative options to remain compliant with the regulatory requirements set out by the Reserve Bank of India (RBI) and Insurance Regulatory and Development Authority (IRDAI), approved the divestment.
It stated that the transaction would result in a pre-tax profit of Rs 351.85 crore. Additionally, increase its capital adequacy ratio from the existing 52.2 per cent to 56.1 per cent.
The company informed that apart from the development being in line with regulatory requirements, the divestment would help Poonawalla Fincorp focus on its core lending business.
It stated that Adar Poonawallla and Serum Insitute of India-held Sanoti Properties would now acquire the direct and indirect stake of Poonawalla Fincorp in Magma HDI. As part of the disinvestment, Poonawalla Fincorp would also divest its 48.89 per cent shareholding in Jaguar Advisory.
Poonawalla Finscorp is a joint venture participant in Magma HDI along with Celica Developers, Jaguar Advisory and HDI Global SE.
As per Poonawalla Fincorp, IRDAI norms stipulate that a promoter of an insurance company cannot be the subsidiary of another company. "Post the acquisition of PFL by Rising Sun Holdings Private Limited (“RSH”) in May 2021 PFL has become a subsidiary of RSH. Accordingly, IRDAI has sought compliance from Magma HDI regarding its shareholding structure," the company informed.
The proposed transaction is subject to the approval of the minority shareholders of Poonawalla Fincorp, and Regulatory approvals including from IRDAI and the Competition Commission of India.