Piramal Enterprises completes deal to buy 10% in Shriram City Union for $133M

Ajay Piramal-led Piramal Enterprises Ltd has completed the acquisition of close to 10 per cent equity stake in Shriram City Union Finance for a total consideration of Rs 790 crore (around $133 million), through a preferential allotment of shares, according to a stock market disclosure.

Piramal Enterprises acquired 65,79,840 equity shares of Shriram City Union Finance Limited at Rs 1,200 per share, valuing the transaction at Rs 790 crore.

“This capital infusion will support its present business model and help further its growth plans over the next few years. Shriram has a good team and we are confident it will create long-term value for shareholders of both companies. Shriram is well positioned to take advantage of the India story, and we see great potential for growth,” Ajay Piramal, chief of Piramal Enterprises, said in the statement.

Piramal's effective holding in the company would be 16.5 per cent factoring in its 20 per cent stake in Shriram Capital, the promoter of Shriram City Union Finance.

In April this year, Piramal bought 20 per cent stake in the group company Shriram Capital, the privately held holding arm for various financial services businesses of the south-based group.

Last year, Piramal Enterprises acquired approximately 10 per cent stake in Shriram Transport Finance Company Ltd, the Chennai-based commercial vehicle financier, for Rs 1,652 crore ($307 million) from private equity major TPG.

Shriram City Union Finance is backed by a string of PE firms, including TPG, Norwest Venture Partners, Bessemer Venture Partners and ICICI Venture. 

Shriram City Union Finance recorded a 20.5 per cent rise in net profit to Rs 151.36 crore for the fourth quarter ended March 31, 2014, over the year-ago period even as total income decreased from Rs 841.14 crore to Rs 833.94 crore.

For the full year, it posted an 18.4 per cent rise in net profit to Rs 532.16 crore with total income increasing from Rs 3,099.93 crore to Rs 3,278.72 crore.

Recently, Piramal also agreed to sell its entire 11 per cent stake in Vodafone’s Indian arm to an indirect subsidiary of Vodafone Group, for Rs 8,900 crore ($1.48 billion), where it netted Rs 3,036 crore in absolute profit from the 52 per cent value growth in its two-year-old investment.

Shares of Shriram City Union were last trading at Rs 1,425 per share, down 0.63 per cent, while Piramal Enterprise shares were up 0.24 per cent to Rs 703.50 each in afternoon trades on the BSE in a strong Mumbai market on Thursday.

(Edited by Joby Puthuparampil Johnson)

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