Shriram group will merge Shriram Capital Ltd and Shriram City Union Finance with Shriram Transport Finance
Shriram Capital will demerge its financial services and insurance business and the rest of its business to be merged with Shriram Transport
The new entity will be named Shriram Finance Ltd, which would be the largest retail finance NBFC in India,
Chennai:
As part of major restructuring in the Shriram group, Shriram Capital on Monday has announced that it will demerge its financial services and insurance business and the rest of its business to be merged with Shriram Transport.
The group has two insurance subsidiaries, Shriram Life Insurance and Shriram General Insurance.
Shriram group will merge Shriram Capital Ltd (SCL) and Shriram City Union Finance Ltd (SCUF) with Shriram Transport Finance Ltd (STFC).
The new entity will be named Shriram Finance Ltd, which would be the largest retail finance NBFC in India, the Shriram City Union said in a filing to exchange on Monday..
The boards of three companies have approved the merger of SCL & SCUF with STFC.
Shriram Transport to merge Shrilekha business consultancy with Shriram Capital,
Pursuant to the merger, Shriram Transport will issue 1.55 shares for every one share of SCUF and 0.097 shares for every one share of SCL, STFC said in filing with BSE.
The merged entity would have a combined Assets Under management (AUM) of over Rs 1.5 trillion and a distribution network of over 3500. All of these would be serviced by a team of 50,000 employees.
The merger would help the group bring together all its lending products – Commercial vehicles, Two-Wheeler Loans, Gold Loan, Personal Loan, Auto Loan & Small Enterprise Finance.
The intent is also to create a comprehensive cross-sell program combining Insurance, broking & AMC businesses, including their Depositors, backed by a state of the art technology platform, it said.
Umesh Revankar, the Executive Vice Chairman and CEO of STFC, would be the Vice Chairman of the merged entity. Y S Chakravarti, the MD & CEO of Shriram City, would be the MD & CEO of the merged entity. Parag Sharma the Chief Financial Officer would work as a Whole Time Director in the board.
Morgan Stanley and ICICI Securities have acted as Financial Advisors for this transaction. The valuation exercise has been conducted by Bansi C Mehta & Co. and Ernst and Young (EY).
EY has also assisted in the restructuring and taxation assessment for the transaction.
J&M Legal has been legal advisor. HSBC and JM Financial have helped with the Fairness opinion.
PWC will help Shriram Transport and Shriram City Union Finance navigate through the postmerger integration process.
The merger is subject to the approval of shareholders of three companies and regulatory bodies like Reserve Bank of India and National Housing Bank etc.
The shares in Shriram City Union Finance jumped almost 11 per cent to touch a day’s high level of Rs 2240 per share on the BSE intraday on Monday, as the Shriram Group announces a composite scheme of arrangement for the merger of Shriram City Union and Shriram Transport Finance.