TPG to take 20% stake in Shriram Transport Finance
TPG Capital will hold a 20% stake in Shriram Transport Finance once the Indian company merges with its unlisted parent and largest shareholder Shriram Holdings Madras. The US private equity firm currently owns 49% of Shriram Holdings and the merger with a public entity should facilitate an exit from its investment.
Shriram Transport Finance's board has approved a swap of 313 shares for every 124 shares in Shriram Holdings, LiveMint reported. This is subject to approval by the Madras high court, regulatory authorities and shareholders. Shriram Transport Finance was advised on the transaction by Grant Thornton and Kotak Mahindra Capital.
R. Sridhar, managing director of Shriram Transport Finance, said that TPG wanted to exercise the exit right it was granted on investing $100 million in Shriram Holdings six years ago. The private equity firm looked into selling its stake earlier this year and Japan's Orix Corp. expressed an interest in buying it. Reports at the time suggested the asset might go for INR30 billion ($572 million).
TPG still holds investments in other Shriram businesses. It owns around 15% of Shriram Capital, the holding company of Shriram Group, which sold a 26% stake to South African insurer Sanlam for an estimated INR20 billion in September. In 2008, TPG purchased a 49% stake in Shriram Retail - which controls Shriram Credit Union Finance - for a reported $120 million in 2008. It used the latter firm as a proxy to acquire the assets of Vishal Retail for INR700 million in March.
TPG also invested $100 million in Shriram Properties in June, taking a 15% holding.
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