Vikram Pandit& JM Financial’s realty venture gets more funds

Former Citigroup chief executive Vikram Pandit and JM Financial have agreed to infuse funds in their jointly promoted JM Financial Credit Solutions (JMFCSL), a real estate focused non-banking finance company.

The duo, along with four other investors, will invest ~8.75 billion. Half of the equity infusion will be from Vikram Pandit, while JM Financial will be infusing 20 per cent of the fund. The balance 30 per cent, or about ~2.63 billion, will come from four investors, said a person in the know.

The fund raising, which comes at a time the NBFC sector is going through turmoil, will give comfort to investors and may help in improving the sentiment.

In a statement, JM Financial said the fund raising will be happening at a valuation of ~63 billion, implying a post-money equity valuation of up to ~71.75 billion.

“JMFL shall continue to retain board and management control of JMFCSL, and accordingly consolidate the financial statements of JMFCSL as a subsidiary of JMFL, i.e. line-by-line consolidation,” the statement said.

The fund will increase the net worth of JMFCSL by 50 per cent, which was at ~17.56 billion as on June 30. After the fund infusion, the debt-equity ratio of JMFCSL will be about 2.1 as of June, the company said in a statement. The debt-equity ratio reported was about 3.8. On a consolidated basis, the debt/equity ratio for JMFL is down at 2.3 as of June 30, against the reported 2.7, the statement said.

“The fundraising is in line with our philosophy to be conservatively leveraged and maintain strong liquidity cushions within the JMFL Group,” said Vishal Kampani, Managing Director of JM Financial Group, in the statement.