Vikram Pandit Richer By Rs 9 Crore; JM Financial Up 40% In 2 Days

Investors have turned hugely optimistic on JM Financial after the company announced that the former Citibank CEO Vikram Pandit will buy 50% stake in the non-banking financial company, JM Financial. Vikram Pandit and his partners have also bought 3% stake in the parent company by means of share warrants. Pandit has been offered 1.16 crore of share warrants by the company while the rest half is being offered to his partners.

The company has also agreed to make an application for the banking license. The board has proposed to appoint Vikram Pandit as a non-executive chairman of the new bank should it get the new banking license. The board has also passed a resolution that Vikram Pandit and Hari Aiyar will have a right to purchase shares up to the amount prescribed by the RBI in the proposed bank.

Vikram Pandit, through his firm, will raise USD 100 million for JM Financial to increase its lending and financing business. They will together also raise USD 100 million to form a distressed asset fund which will help JM Financial to increase its business.

Vikram Pandit is an India born American banker and the former CEO of Citibank who stepped down in October 2012. Pandit's entry in the JM Financial board will add to its brand equity and will also help it increase the banking business on his expertise.

The shares of JM Financial have sky-rocketed in the last 2 trading sessions. On May 15, 2013, its shares closed at Rs 19.05 but on the 2 following days, they rose to Rs 26.70, giving 40% returns in just 2 days. With this huge rise in the share price of JM Financials, Vikram Pandit has become richer by Rs 8.9 crore in a couple of days. The company has also added Rs 592 crore in the market cap including the current preferential allotment to Vikram Pandit and his partners.