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Magma Fincorp Caps Last Week’s Funding Raise For Insurance JV – ICICI Ventures & Morgan Stanley Lead, Poonawalla Doubles Down

Magma HDI is a joint venture between Magma Fincorp and Germany's HDI Global SE. Since early February, Adar Poonawalla-controlled Rising Sun Holdings -- an arm of Poonawalla Finance -- owns 60 per cent in Magma Fincorp.

Photo Credit : Shutterstock


Magma Fincorp has informed the bourses that its Insurance JV, HDI General Insurance Limited (Magma HDI), in a funding round led by ICICI Venture and Morgan Stanley Private Equity Asia managed funds along with the Cyza Chem Private Limited, of the Poonawalla Group, and two-family offices as new shareholders in the Company. The transaction of Rs 525 crores including secondary transactions of Rs 275 crores.

The company said that the fresh capital infusion of Rs. 250 crores would be deployed towards expanding distribution capabilities of the company. The secondary sale of Rs 275 crores was on account of fulfilling the requirement of Magma Fincorp Limited and its group companies to comply with the Reserve Bank of India’s guidelines for ownership of stake in insurance companies.

A week ago, Magma Fincorp announced a massive infusion of close to Rs. 3,500 crores led by Adar Poonawalla’s Rising Sun Holdings Pvt Ltd. – which gave him a 60% share and the position of promoter changed hands to him. This week he doubled down on the investment by participating in Magma HDI General’s fundraise which sends out a positive message to shareholders. Magma Fincorp has seen its share price recover from lows to zoom nearly 10 times in the past year and is still trending positively on almost all technical indicators & moving averages, which augurs well for its investors – and makes the market outlook on the company extremely bullish. 

The company recently shared its FY22 outlook which projects a 20-25% growth guidance on the back of 17-18% growth during a pandemic affected FY21. As it rebrands itself Poonawalla Finance post equity infusion by the group, backed by strong demand and focus on digital, it should see its prospects soaring over the coming year as well as the medium term. And this positive outlook has further reflected on the strong backing that the raise by Magma HDI General received from leading investors, along with its new promoter group. Mr. Adar Poonawalla, Chief Executive Officer, Serum Institute of India, commented, “We are delighted to continue our support as shareholders of Magma HDI and I see huge potential in the growth of Magma HDI” 

The round was led by ICICI Ventures & Morgan Stanley PE Asia. Mr. Puneet Nanda, Managing Director & Chief Executive Officer, ICICI Venture, said, “We are excited about the prospects offered by the under-penetrated Indian insurance sector. We look forward to working 

with the Board and the team of Magma HDI General Insurance”. Mr. Nirav Mehta, Managing Director of Morgan Stanley Private Equity Asia, also commented saying, “General Insurance sector in India is poised for a structural growth phase, and we believe that Magma HDI is well-placed to tap this opportunity” 

Magma HDI General Insurance is a joint venture between Magma Fincorp Limited and HDI Global SE, Germany. The company offers an array of general insurance products for retail and institutional clients. In the retail segment, it offers motor, health, individual personal accident and home; and for corporates, it offers property, fire, marine cargo and liability insurance. Magma shares closed at ₹127.10 apiece on BSE, up 0.25 per cent from the previous close.