Piramal Group plans to merge all three entities of Shriram group and financial services, in which it has considerable stake, and may sell the investments if it gets the right value, said the senior-most executive of the conglomerate.
"We are looking at what is the best way to create value for Shriram, for the shareholders of PEL (Piramal Enterprises Ltd) as well as the Shriram shareholders. One of the ways to create value for all shareholders is to merge all the entities together. We are examining whether all the Shriram entities -- Shriram Capital, Shriram Transport and City Union – can be merged," said Ajay Piramal, chairman of Piramal Enterprises.
In a post-results conference call, the billionaire said, "We are looking to see how we can create value for Piramal shareholders as well as for Shriram. One of the steps we are taking is to ensure to see all the entities of the Shriram Group and the financial services can be merged together so that the lending activity and insurance activities could be merged along with the holding company, which is Shriram Capital. That is one step we are taking.”
The Piramal Group is in early stages of discussions to sell its stakes in three companies of the Shriram Group in a deal valued at about Rs 9,000 crore, The Economic Times reported earlier this week, citing three persons in the know.
Piramal, which began investing in the Shriram Group in 2013 with an initial investment of Rs 4,600 crore, is in talks with Anand Mahindra, among others, for the stake sale. KKR and global pension funds have expressed interest in TPG and Piramal’s combined 29% stake in Shriram Group, the report added.
Refusing to divulge more details, Piramal said, "We are also evaluating whether it makes sense and value for Piramal as well as Shriram if there is an exit possible. There is no time limit to do it. If we find there is a right counterparty and where we can get the right value, we can exit."
Piramal Group owns 20% in Shriram Capital and 10% each in Shriram Transport Finance and Shriram City Union Finance.
Shriram Capital is an unlisted holding company of the Chennai-headquartered financial services group. Shriram Transport specialises in financing second-hand trucks and Shriram City Union is into consumer lending.
In 2017, Piramal had attempted to sell off its holding in Shriram Group when the latter had proposed to merge its businesses with financial services conglomerate IDFC Group. However, the talks fell through as the two entities could not agree upon a deal structure and valuation.
As far as listing of Shriram Capital is concerned, Piramal said that in difficult market conditions one "should be less risky". However, he maintained that "in the medium term we will separate it (by listing)".
Other investors in Shriram Capital include TPG, Singapore sovereign wealth fund GIC and Abu Dhabi Investment Authority (ADIA).