South African insurer to buy 26% stake in Shriram Capital
Some private equity investors in Shriram Capital (SCL) will be granted an exit opportunity as a result of South African insurer Sanlam’s acquisition of a 26% stake in the company. The deal is estimated to be worth INR20 billion ($430 million), with regulatory approval still pending.
Shriram has attracted considerable private equity interest over the year, with 23 firms currently holding stakes in the business. In February, SCL said it had received Foreign Investment Promotion Board approval concerning an INR11.8 billion capital injection from TPG. The US buyout firm now holds around 15% of the company.
It has not been specified whether TPG will be exiting any of its interest in SCL as part of Sanlam's investment.
SCL acts as the financial holding company for the financial services assets of Shriram Group. TPG has invested in several of the group's other subsidiaries. In June, it took a 15% holding in Shriram Properties for INR4.5 billion.
Sanlam and SCL went into partnership five years ago, launching Shriram Life Insurance, in which the South African firm holds a 26% stake, The Business Standard reported. The two companies subsequently formed a non-life insurance company, Shriram General Insurance. Again, Sanlam took a 26% stake.
SCL is expected to use the capital to expand its insurance business and perhaps branch out into other areas of financial services.
In addition to SCL and Shriram Properties, Shriram Group owns Shriram Transport Finance, the largest asset financing company in India, and Shriram City Union Finance, a retail finance company. SCL is responsible for Shriram Fortune Solutions, Shriram Insight Share Brokers and Shriram Wealth Management as well as the two insurance companies.
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