JM Financial Ltd’s Strategic Reinforcement: Bolstering Stake in JMFARC

The Issue and Allotment Committee of the Board of Directors of JM Financial Asset Reconstruction Company Limited (JMFARC), a subsidiary of JM Financial Limited, has issued 35,73,66,435 equity shares. These shares have a face value of ₹10 each and were issued at a price of ₹15 per share, totalling ₹536.05 crore.

This issuance was part of a rights offer from JMFARC to JM Financial Limited, which fully subscribed to the 35,73,66,435 equity shares at ₹10 each.

Details of Acquisition of JM Financial Asset Reconstruction Company Limited (JMFARC)

This acquisition qualifies as a related party transaction. JM Financial Credit Solutions Limited (JMFCSL), a subsidiary of JM Financial Limited, holds a 9.99% equity stake in JMFARC.

Under JMFARC’s rights offer, JMFCSL subscribed to and was allotted 3,96,18,958 equity shares at a face value of ₹10 each, issued at ₹15 per share, amounting to ₹59.43 crore. These shares were allotted on the same terms as those offered to other JMFARC shareholders. Following this acquisition, JMFCSL’s holding in JMFARC is now 9.98%. JMFARC operates within the Financial Services industry.

Objects and Impact of Acquisition

This transaction does not involve a new acquisition since JM Financial Asset Reconstruction Company Limited (JMFARC) is already a subsidiary of the Company, holding a 53.62% equity stake. This subscription is part of the Company’s strategic move to reinforce its stake in JMFARC, which aligns with its core business activities.

Cost and Percentage of Acquisition

The Company has acquired further equity shares of JM Financial Asset Reconstruction Company Limited (JMFARC) at a total cost of ₹536.05 crore. As a result of this acquisition, the Company’s holding in JMFARC has increased from 53.62% (effective shareholding of 58.28%) to 71.79% (effective shareholding of 76.45%).

About JM Financial Asset Reconstruction Company Limited (JMFARC)

JM Financial Asset Reconstruction Company Limited (JMFARC), a subsidiary of JM Financial, issued further equity shares acquired through a rights offer. JMFARC was incorporated on September 19, 2007, and operates as an asset reconstruction company registered with the Reserve Bank of India under the SARFAESI Act, 2002. The company specialises in acquiring non-performing assets from banks and financial institutions and implementing resolution strategies for these assets.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.