Merrill buys Shriram`s truck loans
Shriram Transport Finance Company said Merrill Lynch had offered to buy the company’s truck loan portfolio for $200 million (about Rs 924 crore) during the current financial year.
Merrill Lynch would wrap up the deal through its non-banking finance company in the country – DSP Merrill Lynch Capital, it said.
The first tranche of $100 million is reported to have already been disbursed on September 7 and the next tranche of $100 million will be disbursed during the third quarter of 2006-07.
The deal is expected to empower Shriram small truck owners, who constitute over 75 per cent of the truck population.
Addressing a press conference, R Thyagarajan, chairman, Shriram group, said the group was bringing in institutions like Merrill Lynch to help the small truck owners to get easier access to funds, thereby helping modernisation of the trucking fleet of the country.
He added that there was an opportunity to lend Rs 70,000-80,000 crore to the truck business.
The Shriram group currently disburses about Rs 600 crore a month and targets to lend Rs 6,000 crore by the end of the financial year.
Rajiv Garg, head — global structured finance and investments, DSP Merrill Lynch, said the deal was part of Merrill Lynch’s plans to grow bigger in India and grow its balance sheet in the country.
As of now, its balance sheet size is estimated to be $350-400 million.
Merrill Lynch bought the portfolio of Shriram at par value and not at discounted price. Shriram would be responsible for managing credit of Merrill Lynch, he added.
Shriram Transport has about Rs 8,000 crore assets under its management, of which Rs 2,000 crore was originated by Shriram and sold to Citigroup, UTI Bank and other major banks and financial institutions, but the portion continues to be maintained by the Shriram group.
Shriram Transport reported a revenue of Rs 850.23 crore (after the merger with Shriram Investments) for 2005-06, compared with Rs 346 crore in the previous year. It has a network of 300 branches across the country.
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