Piramal Enterprises raises investment in Shriram group to nearly Rs4,500 cr
05 June 2014
Ajay Piramal-led Piramal Enterprises has bought 65,79,840 shares of Shriram City Union Finance Limited, a non-banking financial company (NBFC), for Rs790 crore, taking the Piramal group's total investments in Shriram Group to a little over Rs4,450 crore over a period on one year.
This is the third time the cash-rich Piramals are buying into a Shriram group company, after the Rs2,014-crore purchase of a 20 per cent stake in Chennai-based Shriram Capital Ltd (SCL) in April this year and the acquisition of a 10 per cent stake in commercial vehicle financier Shriram Transport Finance Company (STFC) for around Rs1,652 crore earlier.
The latest acquisition has been made through preferential allotment of Shriram City Union shares at a discounted price of Rs1,200 per share against the market price of over Rs1,425 a share, Piramal Enterprises said in a communication with the stock exchanges.
Shares of Shriram City Union Finance were trading at Rs1,425, down Rs9, in early trade on the BSE.
Ajay Piramal, Chairman of Piramal Enterprises Limited was confident that the capital infusion would support Shriram City Union Finance Limited's business model and aid its growth plans in the next few years, said Ajay Piramal, chairman of Piramal Enterprises.
He said the company was "well positioned to take advantage of the India story" and he saw great potential for growth.
Shriram City Union Finance is engaged in lending to small businesses and for acquisition of two wheelers, passenger vehicles and commercial vehicles, consumer durables and homes, apart from advancing jewel loans, the statement said.
Shriram City Union had assets under management (AUM) of Rs14,668 crore as of March 2014.
Piramal Enterprises is flush with cash after it recently divested its entire equity stake in Vodafone India Limited for a total consideration of Rs8,900 crore.
The company, however, has no plans to get into any other sector beyond healthcare, information management and financial services, says Ajay Piramal.