Shriram Capital, Shriram City Union to merge with Shriram Transport

Shriram Transport Finance on Monday announced that it will merge Shriram Capital (SCL) and Shriram City Union Finance (SCUF) with itself as part of restructuring in the group.

Pursuant to the merger, Shriram Transport will issue 1.55 shares for every one share of SCUF and 0.09783305 share for every 1 share of SCL, STFC said in a regulatory filing. The new entity will be named Shriram Finance.

The boards of three companies have approved the merger of SCL & SCUF with STFC. The merger is subject to the approval of shareholders of three companies and regulatory bodies like Reserve Bank of India and National Housing Bank etc.

Shriram Capital was so far the holding company for the Shriram group's businesses. According to September 2021 shareholding pattern, Shriram Capital holds 25.56% in Shriram Transport Finance and 33.86% in Shriram City Union Finance.

The merger would help the group bring together all its lending products - commercial vehicles, two-wheeler loans, gold loan, personal loan, auto loan & small enterprise finance - under a single roof, thereby creating a financial powerhouse which would end up being a market leader in all the product and consumer segments that it operates in.

SCUF and STFC see this merger as an immense opportunity to strengthen their consumer offerings and provide a more holistic product basket encompassing all lending products. The intent is also to create a comprehensive cross-sell program combining Insurance, broking & AMC businesses. SCUF brings AUM of Rs 35,000 crore and a distribution network of over 950 branches.

Post-merger with STFC, the merged entity would have a combined AUM of over Rs 1,50,000 crore over 2 crore customers served till date and a distribution network of over 3500 branches. All of these would be serviced by a team of over 50,000 employees.

Shriram Finance will enhance its product basket with new products catering to a larger universe of both Retail & SME customers. The company intends to soon launch a super-app where all its existing and new lending products would be offered under the Shriram Finance umbrella.

Y.S. Chakravarti, managing director and CEO of Shriram City Union Finance would be the MD & CEO of the merged entity. Umesh Revankar Executive Vice Chairman and CEO of STFC, would be the Vice Chairman of the merged entity.

Commenting on the merger, DV Ravi, MD of Shriram Capital said, "The merger will enhance our distribution footprint across all business lines without incurring any incremental capex. The benefits likely to accrue due to synergy benefits and the digital initiatives are immense. This merger will also simplify our holding structure eliminating multiple layers."

While endorsing the merger, Ajay Piramal chairman of PEL said, "I am pleased to see the coming together of both lending businesses of Shriram. While they emerge as the largest retail finance NBFC, it also opens up immense opportunities for them with the synergies that transpire. It will be an exciting journey for the group as it creates the appropriate value proposition for the combined customer base of over 2 crores."

Piramal Enterprises holds 9.96% stake in Shriram City Union Finance.

Shares of Shiram Tranport Finance were down 1.99% at Rs 1,472.75 while shares of Shriram City Union Finance were up 5.89% at Rs 2,144.10 on the BSE.

Shriram Transport Finance Company, the flagship company of the Shriram group, has significant presence in consumer finance, life insurance, general insurance, stock broking and distribution businesses.

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