Piramal Enterprises (PEL), on Thursday, said that it has entered into an agreement with Chennai-headquartered Shriram Group to acquire 20 per cent equity stake in Shriram Capital, a financial services company, for Rs. 2,014 crore.
Shriram Capital is the holding company for the financial services and insurance entities of the Shriram Group. It has an overall customer base exceeding 9 million with more than 53,000 employees across 2,600 offices and has Rs. 78,000 crore in assets under management
Piramal had invested Rs. 1,636 crore in May, 2013, to get a 9.9 per cent stake in Shriram group company Shriram Transport Finance Company, a listed NBFC (non-banking financial company).
Addressing a joint press conference with R. Thyagarajan, Founder of Shriram Group, Ajay Piramal, Chairman, PEL, said, “we look at the future with a lot of optimism. Whatever government comes to power cannot be worse than the last two-three years. I am a lot more optimistic about India than I was last year. The gloom in the economic scenario of the last few years seems to be lifting, and this will spur growth in the economy and the financial services sector. There are few companies as well positioned to take advantage of this as the Shriram group.”
As per the deal, PEL will get two seats on the board of Shriram Capital and key shareholder rights with right of first refusal (ROFR).
There is immense potential in the financial services business of the Shriram group as they operate in the high-growth retail segment, Mr. Piramal said, adding, “they also serve the under-served commercial vehicle sector and are in retail finance.”
“We had several partnerships in the past but this one with the Piramals will be much more productive and beneficial to the community,” Mr. Thyagarajan said, adding, “Ajay Piramal is an entrepreneur and the Shriram group is an organization builder and this is the synergy that will come about from the relationship.”
On the Bombay Stock Exchange, Piramal Enterprises rose by 1.1 per cent to end at Rs. 602.4. Shriram City Union Finance moved up 1 per cent to Rs. 1,215 while Shriram Transport Finance was up 3.02 per cent to close at Rs. 747.15.
