CCI clears JM Financial's 43% stake buy in JM Fin Credit Solutions

Fair trade regulator CCI on Tuesday cleared JM Financial's proposed acquisition of a 43 per cent stake in JM Financial Credit Solutions Ltd.

JM Financial Credit Solutions is an RBI-registered systemically important non-deposit-taking non-banking finance company (NBFC). It is a subsidiary of JM Financial Ltd (JMFL).

It is engaged in wholesale lending activities with a primary focus on real estate financing and corporate financing.

"The proposed combination envisages acquisition of 42.99 per cent of the total paid-up share capital of JM Financial Credit Solutions Ltd (JMFCSL) by JM Financial Ltd (JMFL)," CCI said in a release.

JMFL, a BSE and NSE-listed entity, is the operating cum holding company of the JM Financial Group, that provides integrated and diversified financial services on its own and through its subsidiaries.

Its primary business includes investment banking business, and private equity fund management, along with undertaking operations of private wealth and portfolio management services.

The Competition Commission of India (CCI) also approved the acquisition of 71.79 per cent of the total paid-up share capital of JM Financial Asset Reconstruction Company Ltd (JMFARC) by JMFCSL.

JMFARC, a subsidiary of JMFL, is an asset reconstruction company, registered with the RBI, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

It is engaged in the business of acquisition of stressed assets from banks / financial institutions and implementing resolution strategies for the acquired assets.

In July this year, financial services group JM Financial announced that it had decided to consolidate its holdings in the wholesale debt syndication and distressed credit businesses under a single platform.

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

JM Financial's board had approved the acquisition of a 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.

Further, the board had also given its nod for the acquisition of a 71.79 per cent stake in 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 transaction will result in a net cash outflow of around Rs 426 crore from JMFL, which will be funded from its surplus cash.