The US-based private equity investor TPG Capital has completed the process of taking a 22.65 per cent stake in consumer lending firm Shriram City Union Finance Ltd, following the merger of two of Shriram Group’s subsidiary companies last year, as per market disclosure.
TPG Capital, through TPG India Investment I Inc, picked up the stake in Shriram City Union after the Competition Commission of India (CCI) gave the approval for merging Shriram Enterprise Holdings Pvt Ltd into Shriram Retail Holdings Pvt Ltd.
The deal comes after TPG Capital picked up stake in the investment holding company, Shriram Retail Holdings, in 2008.
According to VCCEdge, the database platform of VCCircle, TPG Capital spent Rs 654 crore for its stake in the holding company (and in turn in Shriram City). At the current market capitalisation of Shriram City, the TPG stake is worth Rs 1,129 crore, giving it 1.73x multiple.
The deal involves a merger of two group holding companies with Shriram City Union, which will give liquidity to TPG Capital. The deal will also consolidate the Shriram Group’s shareholding in its NBFC businesses – Shriram Transport Finance and Shriram City Union Finance – under Shriram Capital.
TPG has invested in various businesses of the $9 billion Shriram Group and the announcement comes after TPG completed a similar process with Shriram Transport Finance Company (STFC).
Early this calendar year, TPG Capital completed exit from the Chennai-based commercial vehicle financier STFC for nearly $600 million, making returns of over 7-8x. (see: TPG Capital in multi-bagger part-exit from Shriram Transport; sells 10% stake for $300M)
(Edited by Joby Puthuparampil Johnson)