Shriram Group To Raise Rs 2,400 Cr To Buy Piramal Stake In Group Firms
The promoter entity of the Shriram Group intends to raise between Rs 2,000 to 2,400 crore in debt to fund the purchase of Piramal Enterprises' stake in Shriram Investment Holdings and other group businesses. This was disclosed by people who are aware of the plan.
To raise the required funds, Shriram Ownership Trust has hired investment banks including Barclays. The trust holds stakes in group companies through Shriram Capital. In January, Piramal Enterprises unveiled that it would sell its entire stake in Shriram Investment Holdings to Shriram Ownership Trust for Rs 1,440 crore by 31 March. Piramal Enterprises holds a 20 per cent stake in Shriram Investment Holdings.
According to one of the people familiar with the plan, "The Shriram Group is looking to raise 2,000 crore to 2,400 crore in debt to buy Piramal's stake. The details of the debt, such as pricing and tenor are being finalised. The funding will be in the form of loans against Shriram Finance’s shares."
Last week, Ajay Piramal's Piramal Enterprises said that the sale of its stake in Shriram Investment Holdings, stating that the move was in line with its focus on monetising non-core assets. Piramal Enterprises noted that "The contribution of SIHPL (Shriram Investment Holdings) in the revenue of the company for the year ended 31 March 2023 was Nil," and added that "The proceeds from the transaction will further strengthen our balance sheet."
Last year, Piramal Enterprises sold its entire 8.3 per cent stake in Shriram Finance, the non-bank finance company of the Shriram Group, for Rs 4,824 crore. Now, it appears that Piramal Enterprises is set to fully exit the Shriram Group.
Piramal Enterprises invested Rs 4,583 crore across three Shriram entities after selling its pharmaceutical business in 2012-13. The company also sold its stake in Shriram Transport Finance for Rs 2,300 crore in 2019. In 2022, Shriram City Union Finance, Shriram Transport Finance Ltd and Shriram Capital merged.
The Chennai-based Shriram Group has two insurance joint ventures, one in life insurance and the other in general insurance. Shriram Capital holds around 70 per cent of these businesses, while Sanlam of South Africa owns the remaining 30 per cent.
In addition, the Shriram Group is currently evaluating options to sell its housing finance subsidiary, with Bain Capital, CVC Capital and Advent International reportedly interested in buying Shriram Housing Finance.
