Shriram City Union Finance Ltd. (SCUF) and Shriram Capital Ltd. (SCL) on Monday announced their merger with group firm Shriram Transport Finance Co. (STFC), with an aim to form India’s largest retail financing NBFC.
The merged entity will be named Shriram Finance Ltd. Before merging with Shriram Transport Finance, SCL will demerge all other businesses of the group — namely, life insurance, general insurance and all non-lending and non-insurance activities and these will be held outside the listed firm.
The boards of directors of STFC, SCUF and SCL, at their respective board meetings held on Monday, approved the merger plan.
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Shriram Transport will issue 1.55 shares for 1 share of SCUF and 0.09783305 share for every share of SCL. This translates into SCL shareholders getting one share of STFC for every share held by SCL in STFC. SCL shareholders will get 1.55 STFC shares for every share of SCUF held by SCL. Shriram Capital is the promoter of STFC and SCUF.
“The merger would help the group bring together all its lending products — commercial vehicles loan, two-wheeler loan, gold loan, personal loan, auto loan and small enterprise finance — under a single roof, thereby creating a financial powerhouse which would end up being a market leader in all the product and consumer segments that it operates in,” the firms said in a joint statement. “The intent is also to create a comprehensive cross-sell programme combining insurance, broking and the AMC businesses, including their depositors, backed by a state-of-the-art technology platform.”
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D.V. Ravi, MD, SCL, said: “The merger will enhance our distribution footprint across all business lines without incurring any incremental capex. This merger will also simplify our holding structure eliminating multiple layers.”
Umesh Revankar, executive vice chairman and CEO of STFC, will be the vice chairman of the merged entity. Y.S. Chakravarti, the MD and CEO of Shriram City, will be the MD and CEO.