Apax Partners is rumoured to sell its entire stake in Shriram Finance through block deal in secondary market on January 13, 2023.
- Apax currently holds 4.63% stake in the Company.
- This is in lieu of the 16.73% that it held in Shriram City Union Finance (SCUF) as on September 30, 2022. Subsequently, SCUF had merged into Shriram Transport Finance, and the combined entity was renamed as Shriram Finance.
- Originally, Apax had acquired 20.37% stake in SCUF in May 2015 for around Rs 2,300. This got reduced to 16.73% as Apax had sold the balance in August 2022 for around Rs 447 crore.
- The current transaction is speculated to happen at approx Rs 2,250 crore.
Rs 2,250 cr now + Rs 447 cr before = Rs 2,697 cr. This is against Rs 2,300 crore of original investment made about 7.5 yrs ago, i.e., 17% total returns excluding dividends.
Apax would surely not be happy with the outcome. However, key is whether it’s exiting at the wrong time when the group has just finished consolidating and has now become one of the largest NBFC in the country?
Private equity funds many a times are forced to exit because of the pressures of the underlying fund tenures and their own predictions about global economic conditions.
Apax has informed the following:
– it held a total of 5.3% in Shriram Finance before the sale through two entities; Dynasty and Arkaig
– of this it has sold 2.14% totalling 79,96,867 shares through block trades on January 13, 2023
– it’s balance stake through these two entities is now 3.16%
the subject transaction as per records on BSE was carried out at a price of Rs 1,300/ share, aggregating to Rs 1,039.6 crore.
Four foreign funds bought the shares – Government Pension Fund Global, BNP Paribas, Fidelity and Societe Generale.