Shriram Capital, Shriram Transport, Shriram City – a merger may be announced soon

As per the news reports, a merger between the unlisted Shriram Capital (SC) and the listed arms – Shriram Transport Finance Company (STFC) and Shriram City Union Finance (SCUF) may be announced soon.

Key points to note –

  • The proposed merger of the three entities is targeted towards group consolidation of NBFC business under one umbrella and reverse merging of the holding company (SC) into it’s step down investments (STFC and SCUF).
  • SC is the principal holding company/Promoter for the Shriram group’s financial services businesses. As on March 31, 2021, Shriram Ownership Trust and Shriwell Trust (not part of Promoter/Promoter group) held stake of 29.7% and 13.2% respectively of SC and the balance being held by Sanlam group (26%), the Piramal group (20%), the TPG Capital group (9.4%) and individuals (1.7%).
  • Reverse merger would allow the investor shareholders of SC e.g., Piramal group, private equity firm TPG Capital etc to get an exit.
  • SC held 25.58% in STFC and 33.86% in SCUF as on September 30, 2021.
  • The proposed mergers have been in works for almost three years now and finally it seems that the group is getting closer to conclude it.
  • ICICI Securities and Morgan Stanley are rumoured to be advising on it. Two years back, Kotak Mahindra Capital’s name was also rumoured.

The proposed merger has been a long hanging uncertainty for the group’s listed entities. Hopefully, it should now be concluded soon so that the group’s management can have greater focus on the business !

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