Flush with funds after selling its domestic formulations business to Abbott, Ajay Piramal-controlled Piramal Enterprises has acquired a 10 per cent stake in Chennai-based Shriram Transport Finance Company Ltd. for Rs. 1,652 crore ($300 million).
Piramal Enterprises, on Friday, bought 2.28 crore shares of Shriram Transport from private equity giant TPG at Rs. 723 per share in a bulk deal from the secondary market. "We see long-term shareholder value creation from this stake acquisition. Shriram Transport is well known for their strong governance and business ethics, which resonates well with Piramal Group’s business philosophy,” Ajay Piramal, Chairman of Piramal Enterprises Ltd., told reporters here. He said Piramal Enterprises would remain a long-term investor in Shriram Transport. Piramal would get no board representation in Shriram Transport.
In 2006, TPG had invested $100 million in Shriram Transport at Rs. 113 per share. It has now exited from this investment at Rs. 723 per share— booking a profit of around seven times. TPG had 20 per cent stake in Shriram Transport, out of which around 10 per cent stake was sold in February this year for about $305 million.
TPG is now believed to be left with 0.07 per cent in Shriram Transport.
Shriram Transport shares closed with a gain of 3.60 per cent at Rs. 760.50 on the BSE. Shriram Transport is India’s largest player in commercial vehicle finance with a presence in financing pre-owned trucks and small truck owners.. Piramal Enterprises had acquired 11 per cent stake in Vodafone India last year for Rs. 5,863 crore.
Mr. Piramal said that his company would exit this investment next year. Vodafone has the first right to buy the stake from Piramal if a planned listing of the phone unit does not happen within 18 months, Piramal said in February last year.
