Shriram mulls to raise ₹2,400 Crore for buying Piramal stake in group firms

23 Feb 2024 , 10:14 AM

According to sources, the Shriram Group’s promoter company plans to raise ₹2,000-2,400 Crore in debt to support the acquisition of Piramal Enterprises’ investment in Shriram Investment Holdings and other group businesses. 

According to sources, Shriram Ownership Trust has recruited investment banks such as Barclays to seek financing. Shriram Ownership Trust owns investments in group firms through Shriram Capital Pvt. Ltd. In January, Piramal Enterprises stated it would sell its whole share in Shriram Investment Holdings to Shriram Ownership Trust for ₹1,440 Crore by March 31. Piramal Enterprises owns a 20% interest in Shriram Investment Holdings. 

‘The Shriram Group is looking to raise ₹2,000 Crore to ₹2,400 Crore in debt to buy Piramal’s stake,’ a person with knowledge of the matter said. The outlines of the debt, including price and tenure, are being agreed. The funding is more akin to loans against Shriram Finance Ltd’s shares.’ 

In the announcement of the sale of its stake in Shriram Investment Holdings, billionaire Ajay Piramal’s Piramal Enterprises emphasized that the decision was in line with their strategy to monetize non-core assets. Piramal Enterprises stated that Shriram Investment Holdings did not contribute to the company’s revenue for the fiscal year ending on March 31, 2023. 

The funds generated from the transaction are expected to enhance the company’s financial position by reinforcing its balance sheet.  Piramal Enterprises sold its entire 8.3% stake in Shriram lending, the group’s non-bank lending arm, in a series of open market block trades in June last year for ₹4,824 Crore. It is currently preparing to completely quit the Shriram Group. 

Piramal Enterprises invested in the Shriram Group following the sale of its pharmaceutical division in 2012-2013. It invested ₹4,583 Crore in three Shriram businesses.

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