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Piramal sells stake in Sriram Transport Finance

Date: 18-06-2019
Subject: Piramal sells stake in Sriram Transport Finance
Shares of Shriram Transport Finance plunged on Monday as Piramal Enterprises said it has sold all of its direct investment in the company to third-party investors. Piramal Enterprises did not state the price at which the sale was done but said it has sold its 9.96% investment. If the sale happened close to Monday’s opening price of Rs 1,020, then Piramal Enterprises is likely to have fetched close to Rs 2,300 crore.

Shriram Transport Finance shares closed Monday’s session down 6.15% at Rs 1,015. Shares of Piramal Enterprises ended the day 3.07% down at Rs 2,004.85.

“We wish to inform you that the company has sold its entire direct investment of 9.96% in the fully paid-up share capital of Shriram Transport Finance Company Limited to third party investors on the floor of the stock exchange,” Piramal said in a stock exchange filing.
“Earlier this year in April 2019, Piramal Enterprises (PEL) had announced its intention to exit from its investments in Shriram and optimally redeploy capital in a market that is clearly seeing consolidation take place. This divestment today is in line with PEL’s pre-stated intent and one of the steps in a broader strategy to leverage the huge opportunities for strategic growth in its own financial services business. PEL remains committed to deliver improved performance, strengthen its industry leadership and consistently create long term value for its stakeholders,” a company statement said.

Piramal had bought its near-10% stake in Shriram Transport Finance in May 2013 for a total consideration of Rs 1,652 crore. The stake purchase had followed Piramal’s announcement of its foray into the financial services business.

The following year, Piramal announced that it acquired close to 20% stake in Shriram Capital, holding company for the financial services and insurance entities of the Shriram Group, for an aggregate consideration of Rs2,014 crore. The same year, it also acquire close to 10% in Shriram City Union Finance, the retail-focused non-banking financial company (NBFC) of the Shriram Group.

Media reports had earlier indicated that Piramal’s exit from the three Shriram Group companies could fetch the firm Rs9,000 crore.  Piramal had reportedly tried to reduce his stake in the Shriram Group when a merger was proposed between IDFC and Shriram Capital. However, it was called off in October 2017 following differences in valuation. Talks for stake sale again picked up steam over the last few months. In April, media reports had cited Ajay Piramal saying that if his firm got the right value for Shriram, they may exit it.

In 2017, Piramal Enterprises announced its foray into the housing finance space. The group had entered into the retail housing finance business through a wholly owned subsidiary, Piramal Housing Finance. “Given the size, scale and market relevance of the wholesale lending business, it was a natural progression to assess opportunities within the retail lending space. The retail housing finance business will initially focus on a product roll out across all major metro cities and thereafter seek to establish a pan-India presence, including Tier II-III towns and cities. The retail construction finance arm will focus on local developers in Tier I and top developers in Tier II-III geographies,” Piramal Enterprises had indicated.

Source: financialexpress.com

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