JM Financial to consolidate debt and distressed credit businesses into a single company

JM Financial (JMFL) has announced plans to consolidate its holdings in the wholesale debt syndication and distressed credit sectors under a single platform following approval from the Board of Directors.
The proposed transaction includes two significant acquisitions. JMFL will acquire a 42.99 per cent stake in JM Financial Credit Solutions (JMFCSL) for Rs 1,282 crore, increasing its total stake in JMFCSL from 46.68 per cent to 89.67 per cent.
Concurrently, JMFCSL will purchase a 71.79 per cent stake in JM Financial Asset Reconstruction Company (JMFARC) from JMFL for approximately Rs 856 crore, boosting JMFCSL’s stake in JMFARC from 9.98 per cent to 81.77 per cent. The net cash outflow of around Rs 426 crore for JMFL will be financed from surplus cash reserves.
The transaction, subject to regulatory and shareholders’ approvals, is expected to be completed within the next six months. This strategic move aims to pivot JMFL from an on-balance sheet business model to a diversified originate-to-distribute/syndication model across various asset classes.
“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 of JM Financial, has said, adding: “We foresee significant long-term growth opportunities emerging for our businesses and are well-positioned to leverage them in the evolving market scenario.”

Report By