JM Financial Ltd (JMFL) has decided to consolidate its holding in wholesale debt syndication business (JM Financial Credit Solutions Ltd/ JMFCSL) and distressed credit business (JM Financial Asset Reconstruction Company Ltd/ JMFARC) ) under one platform.

Under the consolidation exercise, JMFL will up its stake in JMFCSL to 89.67 per cent by acquiring 42.99 per cent stake for a consideration of approximately ₹1,282 crore.

Further, JMFCSL will up its stake in JMFARC to 81.77 per cent by acquiring 71.79 per cent stake from JMFL for a consideration of approximately ₹856 crore.

“The proposed transaction will result in a net cash outflow of approximately ₹426 crore from JMFL and will be funded from surplus cash,” JMFL said in a regulatory filing.

It is subject to applicable regulatory, shareholders and other approvals and is expected to be completed in 3-6 months

The company said, “Over the last 15 years, JM Financial Group has developed significant expertise and relationships both in the wholesale and distressed credit businesses.

“This expertise shall be channelised to pivot from a balance sheet business model to a diversified originate to distribute / syndication model across asset classes.”

“Once JM Financial Group’s ownership in JMFCSL increases to 89.67 per cent, the Group’s share in the consolidated profits will accordingly increase. Further, JMFL will have enhanced control of JMFCSL including capital allocation and distribution of profits,” the company said.

The consolidation move comes against the backdrop of recent actions by RBI against JM Financial Products (JMFPL) and SEBI against JMFL.

In March 2024, RBI directed JMFPL to cease and desist, with immediate effect, from doing any form of financing against shares and debentures, including sanction and disbursal of loans against initial public offering (IPO) of shares as well as against subscription to debentures.

In June 2024, SEBI passed an order directing JMFL to not take any new mandate as lead manager in public issue of debt securities up to March 31, 2025.

JMFL is an operating-cum-holding company, which is engaged in various financial services businesses on its own and through its subsidiary and associate companies.

The company holds investments in its subsidiaries engaged in businesses such as non-banking financial services, asset reconstruction, equity research, equity broking to institutional and non-institutional investors, wealth management advisory, and mutual fund.

JMFCSL. an NBFC, is primarily engaged in funding real estate developers at various stages in the life cycle of a real estate project.

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