Shriram Group on Monday introduced the merger of Shriram Capital Ltd with Shriram Metropolis Union Finance Ltd and Shriram Transport Finance Co. Ltd, which is able to create the nation’s largest retail finance NBFC. SCL’s subsidiary Shriram Transport Finance is India’s largest industrial car financier and Shriram Metropolis Union Finance is a diversified NBFC engaged in lending cash primarily to the underserved phase.
The transaction can also be anticipated to pave for the eventual exit of Ajay Piramal led Piramal Group and personal fairness fund TPG each of that are exiting buyers in Shriram Capital however have been trying to exit the corporate for the previous few years after Shriram group’s unsuccessful merger try with IDFC Financial institution in 2017, which merged with non-public lender Capital First promoted by Warburg Pincus.
SCL, by means of its associates, has a buyer base of no less than 21.65 million, managed by round 67,000 staff throughout 4,000 branches. The corporate posted a web revenue of Rs.4900 crore in FY2021 and has property beneath administration of over Rs.2 trillion as of September 2021.
In a launch, following a board assembly, the corporate mentioned the merger will likely be carried out by means of a composite scheme of association and amalgamation. As part of the merger, Shriram Transport will difficulty 1.55 shares for each 1 share of SCUF; 0.0978 share for each 1 share of SCL. This interprets into SCL shareholders getting 1 share of STFC for each 1 share held by SCL in STFC and SCL shareholders will get 1.55 STFC shares for each 1 share of SCUF held by SCL.
The merger is topic to the approval of shareholders of the three firms — SCL, SCUF and STFC. The merger will assist Shriram group convey collectively all its lending merchandise – industrial automobiles, two-wheeler loans, gold mortgage, private mortgage, auto mortgage and small enterprise finance – beneath a single roof. Alongside, the intent can also be to create a complete cross-sell program combining insurance coverage, broking and asset administration companies, together with their depositors, backed by a cutting-edge expertise platform, mentioned the corporate in its launch.
SCUF has an AUM of ₹35,000 crore and a distribution community of no less than 950 branches. Put up-merger with STFC, the merged entity can have a mixed AUM of no less than ₹1.5 trillion and a distribution community of over 3500 branches. The promoter firm mentioned that related expertise structure in SCUF and STFC will be sure that the branches of the 2 firms will likely be interoperable for enterprise of one another in a really brief time.
Commenting on the merger, DV Ravi, managing director of Shriram Capital mentioned, “ The merger will improve our distribution footprint throughout all enterprise traces with out incurring any incremental capex. The advantages prone to accrue as a result of synergy advantages and the digital initiatives are immense. This merger can even simplify our holding construction eliminating a number of layers.”
The promoter agency mentioned that Shriram Finance will improve its product basket with new merchandise catering to a bigger universe of each retail and SME clients.
With the group’s buyer base swelling because of the merger, the main target of the group will now shift to create digital lending merchandise for a click-n-use intent, mentioned the corporate.
“The corporate intends to quickly launch a Tremendous-App the place all its present and new lending merchandise could be supplied beneath the Shriram Finance umbrella. It will assist clients entry the complete Shriram ecosystem at a single click on and end in a seamless buyer expertise,” mentioned the discharge.
Ajay Piramal, Chairman, Piramal Enterprises Ltd whereas endorsing the merger, mentioned, “Whereas they emerge as the biggest retail finance NBFC, it additionally opens up immense alternatives for them with the synergies that transpire.” Umesh Revankar, Vice Chairman and MD, Shriram Transport Finance mentioned, “Shriram Finance will undoubtedly turn into the market chief for monetary companies in rural India.”
Including to this, YS Chakravarti, managing director and CEO of Shriram Metropolis Union Finance mentioned Shriram Group has at all times saved the credit score starved phase of consumers on the coronary heart of all its merchandise and innovation and we imagine this merger is one other step in direction of simplifying and providing clients options to all their monetary wants beneath one umbrella.
Put up the merger, Revankar would be the vice chairman of the merged entity and Y.S. Chakravarti would be the MD and CEO of the merged entity. Morgan Stanley and ICICI Securities have acted as monetary advisors for the merger, whereas the valuation train has been carried out by Bansi C Mehta & Co. and Ernst and Younger (EY). HSBC and JM Monetary have helped with the equity opinion, whereas PWC will assist Shriram Transport and Shriram Metropolis Union Finance navigate by means of the post-merger integration course of, mentioned the discharge by Shriram Capital.
Supply: Live Mint