News: Magma raises $15 m from Netherlands finance co

(BL 27/03/2007) Kolkata - The board of Magma Leasing Ltd (Magma) at its meeting here on Monday, approved placement of $15 million (approximately Rs 65 cr) of redeemable preference shares to the Netherlands Development Finance Company (FMO), Netherlands.

The fresh investment, as per RBI guidelines, will be treated as Tier-2 capital in the company.

This follows an earlier investment of Rs 21 crore by FMO in Magma Preference shares during February 2006. FMO, with an investment portfolio of 2.4 billion, invests risk capital in companies and financial institutions in developing countries.

Commenting on the transaction, Anjan Mitra, Chief Financial Officer of Magma Leasing said, "FMO's decision to invest an additional Rs 65 crore in Magma is a statement of confidence in the company's strategy and business model and in the growth prospects of both Magma and the Indian retail finance market".

He said the funds raised will strengthen the company's balance sheet, and augment its ability to write higher business volumes.

Magma Leasing, following its merger with Shrachi Infrastructure Finance Ltd, has expanded its branch network to 154 locations across the country and has over Rs 5,500-crore worth of assets under management. The company finances both old and new commercial vehicles, cars, multi-utility vehicles and construction equipment, mainly in semi-urban markets.