Sanlam Ltd (SLM), a South African-based insurer, is to buy 26 per cent in Shriram Capital Ltd (SCL), part of the Rs 30,000-crore Shriram Group. The estimated investment is Rs 2,000 crore.
According to sources in the Group, $266 million (Rs 1,200 crore) will come as cash from Sanlam. The additional amount will come as upstream investment in the insurance business. “They (Sanlam) will now have indirect holding in the insurance business, through Shriram Capital. Both the companies are waiting for the regulators' nod,” said the source.
Sanlam joined hands with Shriram Group five years earlier to launch Shriram Life Insurance Company Ltd. A 26 per cent stake was taken by Sanlam. After the this, the partners launched a non-life insurance company, Shriram General Insurance Ltd, three years before, in which Sanlam again took 26 per cent.
“The proposed investment in Shriram Capital came after the confidence which Sanlam got in us, after five years with the Group,” said the source.
He added the investment would not only help SCL expand the insurance business but also help to buy out shares from some of the private equity (PE) investors in the Group. Shriram is a PE favourite, with 23 of these firms having invested in the Group.
Besides, the money can be utilised for expansion of other finance business and even for the proposed foray into the banking sector, said the official.
SCL is the holding company for the financial services and insurance entities of the Shriram Group. It is the main promoter of the two listed companies, Shriram Transport Finance Company Ltd, the largest asset financing company in India, and Shriram City Union Finance Ltd, a retail finance company, now foraying into the housing sector.
SCL is also the promoter of Shriram Life Insurance Company Ltd and, recently, Shriram General Insurance Ltd, Shriram Fortune Solutions, Shriram Insight Share Brokers and Shriram Wealth Management.
Yesterday, Shriram CCL, a subsidiary of Shriram Capital, had diluted 10 per cent to private equity (PE) firm LeapFrog Investments, for Rs 67 crore.
Source: Business Standard