Piramal to buy 10% in Shriram City for Rs 800 cr

After acquiring 20 per cent stake in Shiram Capital for Rs 2,014 crore two weeks ago, Piramal Enterprises on Wednesday announced it would pick up 10 per cent stake in Shriram City Union Finance for Rs 800 crore.

This will be Piramal Enterprises' third tranche of fund infusion into Shriram group. In May 2013, it had bought stake in vehicle finance company Shriram Transport for Rs 1,652 crore. "This is a fresh investment by way of preferential basis in the company," said Rajesh Ladha, chief financial officer of Piramal Enterprises.

Shriram City Union Finance said at its board meeting on Wednesday, its board had approved the issuance of up to 6,579,840 equity shares of Rs 10 each to Piramal Enterprises on a preferential basis, at Rs 1,200 a share. The price was determined in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

In an interview, Piramal Enterprises chief Ajay Piramal had said if India had to progress, its financial sector had to grow. "Shiram has a good team, a good organisation and a stable management. It is in the right sectors and has a consistent record. Look at the second-hand commercial vehicle financing segment; it is the market leader. Many companies tried to beat it, but didn't succeed. Look at its insurance business - it is profitable from the first year," he had told this newspaper after acquiring stake in Shriram Capital on April 18.

Piramal had earned a huge premium by selling his stake in Vodafone India back to Vodafone for Rs 8,900 crore. Now, he is deploying a substantial chunk of those returns in Shriram group companies.