Piramal may buy 20% in Shriram Capital

Satyanarayan Iyer Mumbai | Updated on November 24, 2017

G.S. Sundararajan   -  Business Line

Piramal Enterprises is likely to buy a 20 per cent stake in Shriram Capital in three-four months, according to G.S. Sundararajan, Managing Director, Shriram City Union Finance.

In May last year, Piramal had bought about 10 per cent stake in Shriram Transport Finance Co for Rs 1,652 crore.

Shriram Transport Finance is the commercial vehicle financing arm of the Chennai-based Shriram Capital, the holding company for the financial services and insurance entities of Shriram Group.

Piramal Enterprises aims to become a strategic investor in Shriram Group.

Sundararajan said Shriram Group is keen to end its reliance on private equity (PE) players for funding and rely more on strategic investors. “We have 23 PE players, who we have been dealing with because they all came in at different points in time. We want to slowly get out of that and have only strategic investors.”South-African company Sanlam Financial Services holds 26 per cent in Shriram Group. “If Piramal gets 20 per cent, we will be very happy as it will mean there will only be the three of us – Shriram, Piramal and Sanlam. Between us, we can hold our investments for a much longer period, and therefore, do things for the long term rather than focussing on quarter-on-quarter profit,” he said in an interview with Business Line.

He said that when Shriram started doing business, it was difficult to get any strategic investor as not many people could understand the company’s business model. PE funds were willing to take the risk because of expectation of high returns.

Sundarajan said the company hopes to do away with PE investments at least at the group level, but continue with the same at the operational level.

“Piramal has always been interested. Initially, we said we will give 10 per cent, but as a strategic player, they wanted a 20 per cent stake in the company. So, there are internal discussions going on…I think, it (investment) will happen in the first quarter of the next fiscal,” he added.

Published on January 07, 2014

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