NBFC in which PE funds like KKR have stake would be talking to anxious investors tomorrow to explain reasons behind the move
Magma Fincorp, the non-banking finance company (NBFC) with a strong presence in the rural markets, is still reeling under the after-effects of demonetization and has sold non-performance assets (NPAs) of about Rs 700 crore.
With top-rung PE funds like KKR and India Value Fund having significant stakes in the company, Magma management led by Sanjay Chamaria would be talking to anxious investors on Wednesday to explain reasons behind the sale concluded last week.
"The company has completed NPAs amounting to Rs 594 crore. The said NPA sale would result in a reduction in standalone profit after tax (PAT) by Rs 125-130 crore. It is further informed that our subsidiary companies, Magma ITL Finance Ltd and Magma Housing Finance, have also sold NPAs amounting to Rs 85 crore. The said NPA sale would result in additional reduction in consolidated PAT by Rs 10-15 crore. Overall, at a consolidated level, we have completed the sale of NPAs amounting to a total of Rs 679 crore," Magma has said.
A lot is at stake for the PE funds like India Value Fund V, which recently bought 11.92% in the Kolkata-based NBFC and for Kohlberg Kravis Roberts (KKR) which owns about 16% through affiliates like KKR Mauritius Direct Investments I Ltd and Zend Mauritius VC Investments.
Two funds exited the firm in March: Indium V sold 8.59% stake while Laurus Mauritius offloaded 3.33%. Incidentally, Indium is managed by India Value Fund Advisors.
The exit of two PE funds in March follows a credit rating downgrade suffered by Magma on March 10 with Care Ratings turning its outlook to 'negative' from 'stable' while keeping the rating same at AA-.
"The outlook of the long-term rating has been revised to negative from stable on the expectation of continuing deterioration of asset quality. The asset quality parameters of the company have deteriorated in nine months of FY17 over the previous 9MFY16 on account of the slippages mainly in the tractor, CV & CE segment and also due to the impact of demonetization. Further, GNPA ratio also deteriorated from 10.74% as on March 31, 2016, to 13.67% as on December 31, 2016," the rating agency has said.
Vice chairman and managing director Chamria had told analysts third quarter earning review, "We have gone through some pain due to the impact of demonetization on the rural economy. Due to demonetization in November, the recovery in the rural economy has got delayed, and we feel that it may take about two quarters for the full normalcy to return."
"(Post) the demonetization in November, the recovery in the rural economy has got delayed, and we feel that it may take about two quarters for the full normalcy to return. We have also gone through some pain due to the impact of demonetization on the rural economy," Chamria had added.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Magma Fincorp")
)
Two funds exited the firm in March: Indium V sold 8.59% stake while Laurus Mauritius offloaded 3.33%. Incidentally, Indium is managed by India Value Fund Advisors.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}