The Hindu : Business : Shriram Transport to augment Tier-1 equity capital

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Wednesday, Nov 14, 2007
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Shriram Transport to augment Tier-1 equity capital

Special Correspondent

To issue shares to U.S. hedge funds on a preferential basis

CHENNAI: Shriram Transport Finance Company Limited (STFC) is set to raise Rs. 600 crore through preferential allotment of equity shares and optionally convertible warrants.

A committee of the company’s board has given its approval to allot 68 lakh equity shares to Blue Ridge Limited Partnership and/or its affiliates, 40 lakh equity shares to Tiger Global Management LLC and/or its affiliates, both New York-based hedge funds, and 12 lakh equity shares to Kampani Finance Limited, a JM Finance group company.

The preferential allotment will be made at a price of Rs. 300 per equity share of Rs. 10 each.

The committee has also approved the issue of 80 lakh warrants to Shriram Holdings (Madras) Private Limited (wherein Shriram promoters and TPG Newbridge have equity stake in the ratio of 51:49) at a subscription price of Rs. 30 for each warrant, conferring an option to the holder to subscribe to one equity share per warrant at an exercise price of Rs. 300 per warrant.

The total investment in the company in the first round will be Rs. 384 crore, which will go up by another Rs. 216 crore if the option is exercised within 18 months by Shriram Holdings (Madras) Private Limited. An extraordinary general meeting of the shareholders will be held on December 12 to seek their approval. Sridhar, Managing Director, Shriram Transport, said, “this infusion of equity will augment the Tier-1 capital of the company and will help Shriram Transport in its ambitious growth plans for the next 3-5 years.”

Mr. Sridhar said post-preferential allotment of shares, the capital of the company would go up to Rs. 211 crore from Rs. 191 crore. There would be only a minimal dilution of the promoters’ holding, he said. After the allotment of preferential shares, Blue Ridge would hold 3.22 per cent stake in the company, Tiger Global 1.89 per cent and Kampani 0.57 per cent.

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