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Our Bureau

Chennai, Nov 13 Shriram Transport Finance Company Ltd (STFC) will be raising Rs 600 crore through preferential allotment of equity shares and optionally convertible warrants.

The board which met today approved the proposed allotment of 68 lakh equity shares to Blue Ridge Ltd Partnership and/or its affiliates, 40 lakh equity shares to Tiger Global Management LLC and/or its affiliates, both New York-based hedge funds and 12 lakh equity shares to Kampani Finance Ltd, a JM Finance group company, all at a price of Rs 300 per equity share.

The three investors will end up with a little over 5 per cent stake in Shriram Transport.

The committee also approved the issue of 80 lakh warrants to Shriram Holdings (Madras) Private Ltd at a subscription price of Rs 30 for each warrant conferring an option to the holder to subscribe to one equity share per warrant at an exercise price of Rs 300 per warrant.

The total investment in the company in the first round would be Rs 384 crore, which would go up by another Rs 216 crore if the option is exercised within 18 months by Shriram Holdings (Madras) Private Ltd.

An extraordinary general meeting of the company will be held on December 12 to seek shareholders approval.

Mr R. Sridhar, Managing Director, Shriram Transport Finance Company Ltd, said, “We are bringing in New York-based hedge funds and JM Finance group as investors along with the promoters in this preferential allotment and this infusion of equity will augment the tier 1 capital of the company and will help Shriram Transport in its growth plans for the next 3-5 years.

He said that the hedge funds that had come in were reputed investors and would provide diversity in their investor base.

He pointed out that earlier investors were largely long-term investors. With this infusion, the foreign company (non-institutional) holding in the company would reach 22 per cent while foreign institutional investors would be of the order of 12 per cent.

He said the company had grown five-fold in five years till 2007 to reach a turnover of Rs 12,500 crore. The company is aiming to double the business in the next three years, he said.

Noting that “we are growing 20-25 per cent quarter-on-quarter, Mr Sridhar said that the infusion of capital would enable Shriram Transport to raise debt from the market for onlending.

He pointed out that banks and financial institutions had already brought in over Rs 10,000 crore of funds into the company.

He said that Shriram Transport found it better to raise funds from banks by securitising off loans because buying the portfolio would help banks meet their priority sector targets.

More Stories on : Preferential Allotments | NBFCs | Venture Capital

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