Leading global private equity TPG Capital will invest $120 mn (Rs 530 crore) in Shriram City Union Finance, the consumer finance vertical of the Chennai-based Shiram Group.
On Friday, Shriram Group and TPG Capital announced a definitive agreement under which the buyout firm would make the investment for acquiring up to 49% stake in Shriram Retail Holdings (SRHPL), the holding company of Shriram City Union (SCUFL).
The transaction would necessitate an open offer for SCUFL in compliance with SEBI’s takeover regulations. TPG would own up to 26.7% of SCUFL, excluding shares that might be tendered in the open offer. The investment is subject to regulatory approvals, according to a statement released on Friday.
This is TPG’s second investment in the Shriram Group. In February 2006, the firm, then known as Newbridge Capital, infused approximately $100 mn into Shriram Holdings (Madras), taking a stake in its subsidiary Shriram Transport Finance Company.
SCUFL, which began operations in 1986, focuses on consumer durable, two-wheeler, personal and enterprise financing across India.
As part of its growth strategy, the company plans to leverage Shriram Group’s large chit-fund network to build its asset book in personal and enterprise loans by primarily targeting non-metro, semi-urban and rural areas through the large branch network.
In the past couple of years, various PE investors such as Chrys Capital, Merrill Lynch, Cambridge, ICICI Venture, Asia Bridge and Bessemer have invested in the company.
Shriram Group chairman R Thyagarajan said: “TPG has been a partner with Shriram Group in its commercial vehicle financing business since 2006 and their involvement has had a positive impact in the growth of the business. We are extremely thankful to them for the confidence reposed on us and are delighted over their involvement in the consumer finance business of the group, which will also significantly strengthen this business.”
Puneet Bhatia, who headed the transaction for TPG, said: “Shriram City Union Finance has a unique franchise and possesses the formidable Shriram group culture of inclusive growth and value creation, and is well-positioned to ride the attractive macro opportunity to emerge as a leader in the retail finance landscape in India.”
TPG was advised by DSP Merrill Lynch and J Sagar Associates and the Shriram Group by Kanga & Co TPG Capital is the global buyout group of TPG.
Source: Economic Times