Shriram to dilute 15% stake to Texas Pacific Group

Shriram Capital (SCL), the holding company of all financial services businesses of the Shriram Group, will dilute 15 per cent stake to private equity investor Texas Pacific Group (TPG). TPG, in turn, will invest around Rs 1,800 crore in SCL.

The proposed capital is likely to be utilised for the group's proposed foray into various financial and non-financial services and to expand Shriram’s existing businesses. The PE firm is likely to infuse money in SCL over the next 45 to 60 days.

According to sources, the money will go into the holding company, 100 per cent owned by Shriram Ownership Trust. This will be the first dilution by SCL to an outside investor. However, TPG is an old partner of Shriram.

The PE firm invested in several ventures of the Group companies, including Shriram Transport and Shriram City Union Finance, and is now to become an investor and partner in the holding company. The total value is estimated to be over Rs 5,000 crore in various Shriram Group companies.

It was learnt the money may be used to fund Shriram’s possible entry into banking and infrastructure . The money will also be used to expand Group’s existing financial and non financial services.

The Rs 30,000-crore Shriram Group started as a chit fund business three decades ago. The Group’s financial services businesses, includes commercial vehicle finance, life & general insurance and chit funds among others. The companies manage assets of Rs 40,000 crore, have 6.5 million clients, served by 1,00,000 agents and 36,000 employees, through 2,700 branches across India. 

The Group has also made investments in manufacturing, value added services, project development, engineering services, pharmaceuticals, machined & auto components, press dies & sheet metal stamping, packaging, information technology and property development.

Shriram is now awaiting bank licensing guidelines by the Reserve Bank of India, which is expected by this month-end. The group is also exploring possibilities of entering the infrastructure business, including thermal power generation.