Shriram Transport to tap market after a decade, plans Rs 1,500 cr rights

Sources said issue may be launched July-end or first week of August; eight merchant bankers have been shortlisted

Shriram Transport Finance Co Ltd (STFC), the NBFC arm of Shriram Group and leading commercial vehicle lender, has initiated talks with merchant bankers for its proposed Rs 1,500 crore rights issue. The company will be tapping equity markets after a decade.

The money will be utilised for company's growth, to meet capital adequacy ratio (CAR) and for other purposes, said sources.

Sources said that the rights issue may be launched at the end of July or first week of August and that eight merchant bankers, including JP Morgan, ICICI Securities, HSBC, BNP Paribas, Citi, Credit Suisse, SBI Capital and Axis Capital have been shortlisted.

The proposed right issues will increase CAR, debt-to-equity ratio and boost its lending business, fortify balance sheets to tackle contingencies and opportunities emerging from the covid-19 crisis.

 

Earlier the company said that it focused on capital preservation, balance sheet protection and controlling overheads. The Company has a healthy capital adequacy ratio, comfortable liquidity position and manageable gross and net stage 3 ratios.

STFC's AUM rose by 5.04 per cent in Q4 to Rs 109749.24 crore from Rs 104482.29 crore, a year ago. CRAR was at 21.99 per cent as compared to 20.27 per cent, a year ago.

This will be the first time in a decade STFC will tap the equity markets to raise funds. STFC last raised Rs 584 crore through a qualified institutional placement (QIP) in January 2010.

Shriram Capital (in which Piramal Enterprise is holding 20 % stake) holds 26.23 per cent stake in STFC. The other major shareholders include Fidelity (3.24 %), Sanlam (2.98 %). GOvernment Pension Fund Global (2.19 %), T.Rowe Price New Asia Fund (1.52) among others. Public and others hold 57.26 per cent in the company.