Sundaram Finance (SFL) has decided to demerge its non-financial services investments into a wholly owned subsidiary, Sundaram Finance Investments (SFIL).

SFIL will be the holding company for all non-financial services investments of SFL and will be listed on the exchanges. The demerger will result in ring-fencing the regulated financial services assets of the group. Sundaram Finance shareholders will receive one share of SFIL for every share held in SFL as on the record date.

Value creation

The appointed date for the scheme is April 1, 2016. As promoter, SFL would hold 26.47 per cent stake in SFIL and the rest 73.53 per cent will be issued to all shareholders of SFL.

TT Srinivasaraghavan, Managing Director, SFL, said in a press release, “Over the years, our investments in the manufacturing and automotive sectors have not only yielded significant returns, but also demonstrated a strong track record of value creation.

“We will continue to explore non-financial services investments out of SFIL, both in manufacturing companies and elsewhere. Most importantly, Sundaram Finance’s balance sheet and capital adequacy will remain robust post-demerger and we will continue to seek growth opportunities in the financial services landscape.”

Sundaram Finance which has a presence across multiple facets of financial services, has over six decades, invested in various non-financial services businesses, including as a co-promoter along with TVS group companies. Some of the important investments include listed companies such as Sundaram Clayton, Wheels India and IMPAL and unlisted companies Brakes India and Turbo Energy.

₹199-crore return

The cumulative investment in these companies in book value terms has grown to over ₹150 crore in 2016 from ₹23 crore in 2006 and yielded a cumulative dividend of ₹199 crore in the last five years.

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