TPG will remain strong partner in insurance, new ventures: Shriram Fin head

In a Q&A, Umesh Revankar says no move by Piramal Group and TPG to sell stake in insurance biz for now

Amid news that private equity major TPG sold its entire 2.65 per cent stake in Shriram Finance for Rs 1,400 crore, Umesh Revankar, Executive Vice Chairman of Shriram Finance believes that the deal happened without any discounts and is a positive for his company. In an interaction with Shine Jacob, Revankar talks about the deal, speculations about Piramal Group exit and future outlook. Edited Excerpts:

1. What does the block deal by TPG mean from the company perspective?

The block deal is a secondary market transaction about which we cannot discuss much. Still, I can tell you that the deal is happening without any discounts, which shows the confidence in the company. It also gives us confidence that any further churning will not impact the share price in the future as well.

TPG is our long-term partner. They have been with us for over 15 years. They have been with us in both listed and unlisted entities. They continue to be our partners in insurance. And they are very good partners. It may be only because some funds have expiry dates. Otherwise, I don’t think they would have sold the stake. They will remain our partners in insurance and possibly in new ventures as well.  

2. There is a speculation that the Ajay Piramal-led Piramal Group may also sell its 8.3 per cent stake in Shriram Finance. Have you had any indication in this regard?

Nothing from them and I don’t think they will exit.

Overall, this segment is looking very positive in the market. The margins are likely to be retained by the company. Earlier, there was the impression that with the increase in interest rates, margins may fall. That apprehension is not there now, which is positive for the overall NBFC (non-banking financial company) industry. The economy is doing well and there is good demand for vehicles and equipment, and infra-spend by the government is optimistic. All these developments are good for our company.

3. Regarding Shriram General Insurance Holdings (SGIH), there was news that both Piramal Group and TPG may be selling their stake of close to 30 per cent. Anything happening in this regard?

No, they are unlisted and I don’t really see it. It is not a market operation and will be more of a bilateral deal. I don’t think there is any such move at this juncture. We have not come across any information. Since these are all bilateral deals, somebody has to be in touch with us or we need to be in touch with somebody. That is not happening anywhere.

4. You were expecting a 15 per cent increase in assets under management (AUM). Is demand recovery helping in this?

Our AUM is likely to grow by 15 per cent in 2023-24. Our focus would be on improving our bottom line further, on operational efficiency and on federal asset quality. That will remain our focus.  

Commercial vehicle sales will grow in double digits in FY24, which is very positive for us.  Vehicle prices have also risen by another 3-4 per cent this financial year. In spite of the price increase, the sales are going up. This shows that demand is robust.

5. Passenger vehicles still account for just 18 per cent of your sales. How do you plan to balance it with commercial vehicles, whose share 50 per cent? What is the outlook for other key segments like gold and MSME?

It will remain at this level. I don’t see any major change in the pattern and the segment will grow on its own. We are increasing the reach of SME and gold business and because of this reach, growth rate will be higher. Earlier, it was focussed in South and the expansion across the country will help year-on-year growth rate. That doesn’t mean that ratios will change significantly. There may be a 1 per cent or 2 per cent increase in the overall ratio. Otherwise, it will remain at the same range in terms of share. Used vehicle segment continues to be robust and that will grow as well.