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Our Bureau

Company to get capital infusion of Rs 192 crore

Chennai , Dec. 29

Three institutions have picked up 10 per cent stake each in Shriram City Union Finance Ltd, for Rs 160 a share.

Merrill Lynch through its arm Indopark Holdings, ChrysCapital through its arm Van Gogh and Cambridge Place of UK have acquired 40 lakh shares each at a price of Rs 160 a share, allotted to them on preferential basis. Consequently, Shriram City will get a capital infusion of Rs 192 crore.

At a press conference here, the Chairman of the Shriram group, Mr R Thyagarajan, said the company could leverage eight times the additional capital, to raise about Rs 1,500 crore. These funds would be used in a year's time, he said.

Shriram City manages loan assets of Rs 1,500 crore-Rs 1,000 crore held in its own books and the rest securitised off. Of the assets held by it, about Rs 600 crore relate to loans given for purchase of used trucks. The rest comprises loans for buying consumer durables, personal loans and 2-wheeler and 3-wheeler loans.

Enterprise financing

In addition, the company has started a new line of business, which it calls `enterprise financing'. Under this product, loans are given to those who need funds to set up new businesses — a sort of venture funding — only the business idea does not have to be new.

Mr Thyagarajan said the `chit companies' of the Shriram group had about 12 lakh members, of whom about 5 lakh were small businesses, who looked at chits as a means of funding for their businesses. Chits are relatively costlier, and unreliable means of funding (because availability of funds depends upon whether or not the member wins the chit).

The `enterprise finance' product of Shriram City would provide a better alternative to these chit members, Mr Thyagarajan said.

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