PE funds Advent International, Blackstone Group, CVC Capital, Carlyle Group and Brookfield have placed initial bids to buy around 30% in Shriram Capital, three people familiar with the development said, as existing investors Piramal Enterprises and TPG Capital seek to exit the Chennai-based financial services firm. The deal, if successful, will likely value the unlisted firm at Rs 18,000-20,000 crore, the people said, pegging TPG and Piramal’s combined holding at around Rs 6,000 crore.
The bids came in last week and a deal is likely in a few months, said sources privy to the transaction details.
“An expression of interest has come from PEs and the due diligence process will kick off now,” said another source aware of the details.
Piramal Group Looking for M&As
Shriram Capital and Piramal Group did not respond to ET’s emailed queries till press time on Wednesday, while TPG Capital, Carlyle and Blackstone did not comment.
In 2014, the Mumbai-based Piramal Group bought a 20% stake in Shriram Capital for Rs 2,014 crore. TPG Capital holds a 9% stake in the company, while South Africa-based Sanlam Group owns 26% and the Shriram Ownership Trust has as much as 45% stake.
Shriram Capital Ltd is the holding company for the financial services and insurance companies of the Shriram Group, led by Ramamurthy Thyagarajan.
The group’s publicly listed entities include Shriram Transport Finance, Shriram City Union Finance, Shriram EPC, Shriram Asset Management, and its privately held insurance business.
The planned share sale by Piramal Enterprises, if it goes through, will mark billionaire Ajay Piramal’s complete exit from Shriram Capital after many years of unsuccessfully attempting to merge the financial services businesses of both the conglomerates.
Earlier this year, Piramal Enterprises said it intended to exit Shriram Capital as it looked to redeploy funds after a liquidity crisis hit nonbanking financial companies following the collapse of Infrastructure Leasing & Financial Services (IL&FS).
Citibank said in a recent report that Piramal was likely to use the sale proceeds to inject capital into its lending business, support organic growth or look for acquisitions in financial services, as the company moves towards a more retail and housing-oriented product mix. The Piramal Group is looking for mergers & acquisitions and portfolio buyout opportunities at distressed valuations in the financial services space.
The Piramal Group is, however, looking to sell its stake in Shriram City Union and has been in talks to shore up funds from Japan’s SoftBank for Piramal Capital & Housing Finance, a deal that is likely to close soon, said another source in the know.
ET reported on July 15 that SoftBank’s final decision will hinge on splitting the Mumbai-based group’s retail and wholesale books and adding a technology layer to the business.
