JM Financial Clears Plan To Consolidate Its Debt And Distressed Credit Businesses

Financial services group JM Financial on Saturday said it has decided to consolidate its holdings in the wholesale debt syndication and distressed credit businesses under a single platform.

Board Approves Acquisition

The consolidation aims to leverage JM Financial Group's expertise to achieve higher risk-adjusted returns and shift towards a diversified syndication model.

"The Board of Directors at its meeting held today approved the acquisition of 42.99 per cent stake in JM Financial Credit Solutions Ltd (JMFCSL) by JM Financial Ltd (JMFL) for a consideration of approximately Rs 1,282 crore," the company said in a statement.

In addition, the board has also given its nod for the "acquisition of 71.79 per cent stake in JM Financial Asset Reconstruction Company Ltd (JMFARC) by JMFCSL from JMFL for a consideration of Rs 856 crore".

After the transaction, the stake held by JMFL in JMFCSL will increase from 46.68 per cent to 89.67 per cent. Also, the stake held by JMFCSL in JMFARC will increase from 9.98 per cent to 81.77 per cent.

The proposed transaction will result in a net cash outflow of around Rs 426 crore from JMFL which will be funded from surplus cash.

Optmise Allocation and Distribution

Both the transactions are expected to be completed in 3-6 months, subject to requisite regulatory, shareholders and other approvals, JM Financial said.

"The proposed transaction shall align our corporate and capital structure offering greater flexibility to optimise capital allocation and distribution of profits to our shareholders," Vishal Kampani, Non-Executive Vice Chairman at JM Financial Ltd, said.

"We foresee significant long-term growth opportunities emerging for our businesses and are well positioned to leverage them in the evolving market scenario," Kampani added.