Piramal buys 10% stake in Shriram City

R Yegya Narayanan Coimbatore | Updated on March 12, 2018

Ajay Piramal, Chairman, Piramal Group (file photo). This is the third stake acquisition made by Piramal Enterprises in a Shriram group company in the past one year.

The deal takes Piramal’s investment in the Shriram group to about ₹4,500 cr

Cash-rich Piramal Enterprises has acquired a 9.99 per cent stake in Shriram City Union Finance, the retail focused non-banking financial company of the Shriram Group, for ₹790 crore.

In a statement to stock exchanges, Mumbai-based Piramal said it bought 65,79,840 shares of Shriram City through a preferential allotment at a price of ₹1,200 apiece. The allotment has been made at a marginal discount to the current market price of the Shriram City scrip. On Thursday, the company’s stock closed at ₹1,429.75 on NSE, down 0.58 per cent from the previous close.

Third acquisition

This is the third stake acquisition made by Piramal in a Shriram Group company in the past one year. In May 2013, it invested ₹1,636 crore to pick a 9.9 per cent stake in Shriram Transport Finance Co, one of the listed NBFCs of the Shriram Group. In April this year, Piramal bought 20 per cent equity in Shriram Capital, the holding company of the financial services and insurance entities of the Shriram Group, for ₹2,014 crore.

The latest deal has taken Piramal’s total investment in the Shriram group to nearly ₹4,500 crore.

Piramal is flush with cash as it recently sold its entire equity stake in Vodafone India for ₹8,900 crore. The company made a significant profit in the Vodafone stake sale as it had bought the shares at an average price of ₹1,290 apiece for a total value of ₹5,864 crore in FY12.

Shriram City Union has assets under management worth ₹14,668 crore as in March 2014. The company is engaged in lending to small businesses and for buying two-wheelers, passenger vehicles and commercial vehicles, consumer durables and homes.

Strategic investor

GS Sundarajan, Managing Director of Shriram City, told Business Line in January that Piramal Enterprises aims to become a strategic investor in the Shriram Group. The group is keen to end its reliance on private equity (PE) players for funding and rely more on strategic investors, he said.

“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.”

Ajay Piramal, Chairman of Piramal Enterprises, is confident that the capital infusion would support Shriram City’s business model. The company is positioned to take advantage of the India story, he said.

Published on June 05, 2014

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