The company’s shares gained 10% in Mumbai on Thursday, making them set for the biggest advance since July 2019. Adar Poonawalla, CEO of Serum Institute of India Ltd., which is manufacturing the coronavirus vaccine developed by AstraZeneca Plc and the University of Oxford, will spend 32.1 billion rupees ($441 million) to acquire a 60% stake in the Kolkata-based financier.
Poonawalla is expanding his shadow banking business just as the industry is showing signs of recovery following a crisis that started with the collapse of a non-bank financier in 2018. The pandemic had made it harder for small shadow lenders such as Magma Fincorp to raise money, said Jyoti Roy, deputy vice-president at Angel Broking Ltd.
“The presence of a deep-pocketed investor will help Magma Fincorp to step up its business,” Roy said. “Valuations in the Indian shadow banking space have come off significantly in the last two years and there are quite a few such small shadow lenders who are up for sale at attractive prices.”
Magma Fincorp and its subsidiaries will be renamed and branded as Poonawalla Finance, Magma said in a filing late Wednesday. Poonawalla’s acquisition vehicle — Rising Sun Holdings — will also make an open offer for the rest of Magma’s shares at 70 rupees each, some 25% discount to the current price.
The stock rose on Thursday for a ninth consecutive session, putting them on course for its longest run of gains since June. It has surged 107% so far this month, after a nearly 13% jump in January.
Poonawalla’s flagship Serum Institute has an agreement with AstraZeneca to roll out at least one billion doses of the coronavirus vaccine.
