Former Citigroup CEO Vikram Pandit is set to exit the real estate financing business established by veteran dealmaker Nimesh Kampani. INH Mauritius, an investment fund managed by Pandit, will sell its 49% stake in JM Financial Credit Solutions (JMFCS) to Kampani's JM Financial in a deal valued at approximately Rs 30 billion.

Following the sale, Pandit will step down as chairman of the mid-tier NBFC. The transaction will increase JM Financial's stake in JMFCS from 47% to 96%, with the remaining 4% held by Moraine Master Fund and Aparna Aiyar, wife of Pandit's business partner Hariharan Aiyar. Hariharan will also step down from the JMFCS board following the shareholding change.

JM Financial, which has faced regulatory restrictions from managing debt issues and offering loans against shares due to governance lapses, will acquire 43% from INH Mauritius for Rs 12.82 billion in the first phase of the transaction. This deal will be financed through JM Financial's internal accruals, which amount to over Rs 40 billion.

Sources indicate that INH is exiting JMFCS as the fund's lifespan is coming to an end. INH Mauritius initially invested in JMFCS in fiscal 2015 and subsequently acquired more shares in 2017 and 2018, investing a total of Rs 9.5 billion. This marked Pandit's first investment in India's financial services sector. He also holds a 1.2% stake in the listed JM Financial.

The Rs 30 billion deal valuation is lower than JMFCS's net worth of Rs 42 billion, attributed to under-recoveries in real estate financing not yet reflected in the books, stemming from stress on developers.

Additionally, JMFCS will acquire a 72% stake in an asset reconstruction company from JM Financial for Rs 8.56 billion, increasing its stake in JMFARC from 10% to 82%.

(Source: ET& TNN)