PE firm TPG Capital asks Puneet Bhatia to honour shareholders' verdict

In yet another twist to the Shriram Transport saga, US-based private equity TPG Capital has told its India head Puneet Bhatia to honour shareholders’ verdict by not joining the board of the vehicle finance company.

According to sources, TPG, which has investments in several firms domestically as well as globally, doesn’t want to be at odds with voting advisory firms and shareholders over any governance issues.

“Officials at TGP’s headquarters in the US have taken cognisance of the issue and have advised Bhatia not to join the Shriram board. Being a minority shareholder in many listed firms, the private equity major doesn’t want to set a wrong example,” said a source with the knowledge of the development.

TPG declined to comment on the issue.

Earlier this month, the resolution to re-appoint Bhatia on Shriram Transport’s board was defeated by shareholders with an overall 57 per cent ‘against’ vote. Nearly 83 per cent non-promoter shareholders of the company voted ‘against’ the ordinary resolution after voting recommendation firms red-flagged Bhatia’s poor attendance at board meetings.

However, Shriram Transport has thrown its weight behind Bhatia by looking to appoint Bhatia as a nominee director of the promoters. The company has given started talks with top institutional investors explaining to them Bhatia’s contribution to the company.

Shriram Transport even issued a public statement requesting investors not to judge Bhatia solely on his attendance.

“Bhatia has been representing TPG on the boards of the various companies in the Shriram Group. He has been adding a lot of value and immensely contributed to the growth of various businesses in the Group. He has also been in discussions with the leadership and management on various occasions, apart from the meetings of the board and committees. It was unfortunate that recently some of the shareholders voted against his continuance as a director, possibly solely relying on attendance not being very high for the board meetings," the company had said in a statement.

Voting advisory firms recommended an ‘against’ vote if the attendance of a director does is less than 75 per cent at board meetings. During financial year 2019-20, Bhatia had attended just three out of the six board meetings conducted by Shriram Transport.