Shriram Retail Holdings has acquired an additional 6.8% stake in Shriram City Union Finance Ltd in the open offer backed by buyout giant TPG. The open offer was pursuant to TPG acquiring 49% in Shriram Retail Holdings, the largest shareholder of the public-listed finance arm.
The offer was to pick up to 23.5% additional stake in the company for around Rs 431 crore. But, the actual money shelled out in the open offer was Rs 124.58 crore. Post-offer, Shriram Retail Holdings own 57.7% in the 23-year-old company that focuses on consumer durable, two-wheeler, personal and enterprise financing across India.
The open offer, which was being managed by DSP Merrill Lynch, opened on August 27 and closed on September 15. The offer was made at Rs 400 per share. The Shriram City Union Finance scrip closed at Rs 384.9 on Thursday. Other PE investors in the company include the likes of Chrys Capital and Bessemer.
Shriram City Union Finance specialises in small-ticket retail finance with 633 business outlets across the country and claims to lend around Rs 300 crore each month in small-ticket size between Rs 8,000 and Rs 1 lakh, with tenors ranging from 12 to 36 months. For the year ended March 2009, the consumer finance company had churned out over 50% revenue growth and 34% growth in net profit.
Last year, Shriram Group and TPG Capital had announced a definitive agreement under which the buyout firm was acquiring up to 49% stake in Shriram Retail Holdings. This deal gave TPG an indirect holding of 26.7% of the listed consumer finance arm.
This was TPG’s second investment in the Shriram Group. In February 2006, it had invested through Newbridge Capital (previous avatar) approximately $100 million into Shriram Holdings (Madras), taking a stake in its transport finance subsidiary.