Non banking finance company (NBFC) Magma Fincorp Ltd. is all set to buy the home loans arm of GE Capital India through an all cash agreement amounting to Rs. 1600 crore. The financing of the acquisition will consist of a combination of share capital and debt instruments.

The acquisition will be concluded in two phases - the first phase will include buying GE Money Housing Finance, the home loans arm of GE Capital India whose home loan portfolio is worth Rs. 660 crore. The second phase includes acquiring the entire loan against property portfolio of GE Money Financial Services, which is worth Rs. 940 crore.

After the buy-out, GE Money Housing Finance will be a subsidiary of Magma Fincorp Ltd. The new firm so formed will be named Magma Housing Finance Ltd. Following the acquisition, the Kolkata based NBFC, Magma, will get a license to begin operations in the home loans segment. In addition to this, it will also be entitled to avail refinance from National Housing Bank.

With this acquisition, the NBFC Magma Fincorp's business portfolio will get diversified and include housing finance segment also. It is reported that Magma wanted to diversify its portfolio due to the slowdown in its commercial vehicles segment.

On the matter, the President and CEO of GE Capital India, Mr. Anish Shah said, "It (sale of home loans business) is in line with a decision we had taken three years ago to exit from our mortgage loan business in India. We will continue to focus on growing our commercial finance business and credit card joint venture in India."