Piramal Enterprises Ltd. (PEL) said that it bought 65,79,840 equity shares of Shriram City Union Finance, a non-banking finance company belonging to the Shriram Group for Rs. 790 crore.
A statement from PEL said the acquisition was by way of a preferential allotment of shares by Shriram City Union FInance at a price of Rs. 1,200 per equity share.
This deal signals PEL’s third investment in the Shriram Group. In May 2013, PEL bought a 9.9 per cent stake in Shriram Transport Finance for Rs. 1,636 crore and in April 2014, it bought 20 per cent in Shriram Capital for Rs. 2,014 crore. The current deal takes PEL’s total investment in the Shriram Group to Rs. 4,440 crore.
In a statement, Ajay Piramal, Chairman, PEL said, “This capital infusion will support Shriram City Union Finance’s present business model and help further its growth plans over the next few years. Shriram is well positioned to take advantage of the India story and we see great potential for growth.”
Shriram City Union Finance is a leading player in retail financing with Assets under Management of Rs. 14,668 crore in March 2014. It offers multiple loan products to small business owners and for acquiring assets such as vehicles, consumer durables and homes. It also offers loans against gold ornaments and for personal consumption.
PEL has a huge cash reserve, having divested its entire stake in Vodafone India to Prime Metals, a subsidiary of Vodafone Group Plc for Rs. 8,900 crore in April 2014. It had bought the Vodafone stake at an average price of Rs. 1,290 per share for Rs. 5,864 crore in 2011-12.
Piramal Enterprises is a diversified company with a presence in pharmaceuticals, financial services and healthcare information management.
On the Bombay Stock Exchange on Thursday, Piramal Enterprises rose 1.03 per cent to close trade at Rs. 709.05 while Shriram City Union Finance slid 0.63 per cent to close trade at Rs. 1,425.
