MUMBAI : Piramal Enterprises Ltd will get to nominate two directors to the board of Shriram Capital Ltd and the position of a key stakeholder after it buys 20% stake in the latter, Piramal Enterprises Chairman Ajay Piramal said.
Piramal Enterprises will acquire 20% in Shriram Capital for 20.14 bln rupees. Shriram Capital is the holding company for group listed companies like Shriram Transport Finance Co Ltd and Shriram City Union Finance Co Ltd. Shriram Group will use the funds to expand its insurance business outside India, founder R. Thyagarajan said. Shriram Capital currently has a life insurance and general insurance company in the country. “Financial space is today a good area to invest in. Mezzanine funding is going to be a big area where there will be funds. India being a capital-starved nation, many companies need money to complete their last mile,” Piramal explained the rationale behind investing in a non-banking finance company in the current subdued economic environment.
Post the tie-up, the stake of promoter Shriram Ownership Trust will come down to around 47.80% from 64.00%, while stake of Sanlam Ltd, a joint venture partner of Shriram Group in its insurance operations will fall to around 23.20% from 26.00%. -Cogencis
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