Sanlam's investment in Shriram Financial Ventures gets CCEA nod

The Cabinet Committee on Economic Affairs today gave its approval to the proposal of Shriram Financial Ventures (Chennai) Pvt. Ltd. to allot shares to Sanlam Emerging Markets (Mauritius) Limited. The approval would result in FDI amounting to Rs 2,000 crore approximately in the country, according to Ministry of Finance release.

Earlier, Johan van Zyl, CEO, Sanlam Group said that the rationale behind the investment is to broaden Sanlam’s financial services exposure in growth market. The investment will increase Sanlam’s exposure to the financial services activities of the Shriram Group, which held through SCL.

“Sanlam’s investment in Shriram Capital is aligned with the current and the future expansion interests of Sanlam with that of our Indian partner (Shriram), while it also provides Sanlam access to the strong growth and profit generating capacity of the financing entities. This investment is also in line with Sanlam’s strategy to diversify both geographically and into broader financial services,” said Zyl.

Sanlam and Shriram Group floated Shriram Life Insurance Company Ltd, five years ago, in which Sanlam picked up a 26% stake. After three years, both the partners launched Shriram General Insurance Ltd, in which Sanlam picked up 26%.

Company sources said that Sanlam will subscribe 26% interest in SCL through a cash contribution, while Sanlam’s 26% interest in both Shriram Life Insurance and Shriram General Insurance will be transferred to SCL. The existing management and governance arrangements in the insurance ventures, as well as Sanlam’s entitlement to acquire a further 23% in both ventures, will remain unchanged.

SCL is the holding company for the financial services and insurance entities of the Shriram Group. SCL is the main promoter of the two listed companies, Shriram Transport Finance Company Ltd, the largest asset financing company in India and Shriram City Union Finance Ltd, a retail finance, which is now foraying into housing sector. SCL is also the promoter of Shriram Fortune Solutions, Shriram Insight Share Brokers and Shriram Wealth Management.