Overseas investment companies are flocking to the Shriram
group. The latest is the Newbridge Capital that manages
over $2 billion. The company has taken 49 per cent stake
at a sizeable premium in Shriram Holdings (Madras) Private
Holdings is the holding company for the group's three
truck financing outfits viz Shriram Transport Finance
Company Limited (STFC), Shriram Investment Company Limited
(SIL) and Shriram Overseas Finance Limited (SOFL). Interestingly
Shriram Holdings is in turn a subsidiary of Shriram
Financial Services Holdings Pvt Ltd.
per the deal Newbridge would invest $100 million (Rs448
crore) in the three truck financing companies and also
acquire the 49 per cent stake in Shriram Holdings.
to R Sridhar, managing director, STFC, "The Newbridge
funds will first come to Shriram Holdings. And from
there the three operating companies would get their
share." In the first round of funding totaling
Rs300 crore, STFC would get Rs140 crore, SIL Rs130 crore
and SOFL Rs30 crore. The additional funds would enable
the group to lend upto Rs7,500 crore.
three financing companies will also consider a preferential
convertible warrant issue to Shriram Holdings. If the
later exercises the option then the additional funds
infusion in the three companies would be to the tune
of Rs175 crore.
preferential issue would invite open offer provisions
of the take-over regulations and Shriram Holdings will
acquire 20 per cent of the public holding in the operating
is interesting is the timing as well as the deal structure.
The Shriram group has announced its decision to merge
the three truck financing companies. Already the process
of merging SIL with STFC has commenced. A year later
SOFL will be merged with STFC. By then STFC will be
the largest non banking finance company in the country.
January 2005, ChrysCapital III LLC, Mauritius through
is subsidiary Uno Investments had invested around Rs100
crore in STFC, SIL and SOFL for 20.60 per cent stake.
The other investors in the three Shriram group's truck
financing companies are FMO- a Development Financial
Institution, Netherlands, Reliance Capital, UTI Bank
and Citicorp Finance (India) Ltd.
Newbridge's representatives will be on Shriram Holding's
board, Thyagarajan rules out any change in the operating
the question whether the group is planning to exit the
financing business-what with Newbridge becoming a major
partner in the holding company and the merger of operating
companies- Thyagarajan says, "As of now there is
no plan to exit the truck financing business. There
is no moksha in business. Further the group is
not averse to holding minority stake if need be."
merger, Shriram Holdings and associates will control
around 70 per cent of STFC and 30 per cent will be with
current holdings of Indian promoter group in the three
11.69 per cent
SIL 11.67 per cent
SOFL 21.90 per cent