Private equity major exiting out of Shriram Finance

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.

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