Private equity firms Multiples Alternate Asset Management and Creador Capital are acquiring 10 per cent stake in Murugappa Group’s Cholamandalam Investment & Finance Co Ltd for Rs 212 crore, valuing the public-listed non-banking finance company (NBFC) at Rs 2,120 crore.
The shares are being allotted on a preferential basis to the private equity firms who are investing Rs 106 crore each, according to a filing by the company. Shareholders’ approval is awaited for the transaction.
VCCircle reported yesterday that Creador Capital and Multiples were close to acquiring stake in Cholamandalam.
The shares are being allotted to the investors at Rs 160 per unit, a 4.88 per cent premium to Tuesday’s closing price of Rs 152.55. Interestingly, the price of the current preferential allotment is equal to the placement made by Cholamandalam in 2010.
On Wednesday, the company’s scrip was trading at Rs 152 at 2:30 pm on the BSE, down 0.36 per cent from the previous close.
Cholamandalam Investment & Finance is primarily involved in vehicle financing and currently focuses on light commercial and small commercial vehicles (LCVs and SCVs). The company has further presence in home loan and personal loan (against assets and properties) segments and it has recently started gold loan business.
According to a December presentation by the company, around 70 per cent of its assets are in vehicle finance, 22 per cent in home loans and the rest in personal loans.
For the nine-month period ending December 2011, Cholamandalam saw 49 per cent growth in aggregate disbursements to Rs 6,017 crore. Gross income from operations also witnessed 49 per cent growth, amounting to Rs 1,207.93 crore, while profit before tax was up 170 per cent to Rs 198.73 crore for the same period.
Cholamandalam has 347 branches across 21 states and Union Territories of which 90 per cent are in tier II and tier III cities. World Bank arm IFC is the largest non-promoter shareholder of the company with 9.92 per cent stake while others investors include Amansa Capital and Aquarius Investment.