Piramal, TPG on verge exit from Shriram General Insurance Holdings

Likely to sell combined stake of 30% in the company at an enterprise valuation of $2 billion, say sources

Two existing investors in Shriram General Insurance Holdings, Ajay Piramal-led Piramal Group and TPG Inc, are on the verge of selling their combined stake of about 30 per cent in the company. The firm would be valued at around $2 billion, according to sources close to the development.

While Piramal holds 20 per cent stake in the firm, TPG’s share is 9.5 per cent. Shriram Capital holds 63.88 per cent. “Shriram General Insurance Holdings may be valued at about $2 billion,” said a source. This comes soon after the merger of Shriram Capital Ltd (SCL) and Shriram City Union Finance Ltd (SCUF) with Shriram Transport Finance Ltd (STFC) to create the largest retail non-banking financial company (NBFC) in India, Shriram Finance Ltd (SFL). It was widely believed the restructuring would pave the way for an easy exit for Piramal and TPG.

It was in 2013 that Piramal Group first invested in Shriram Group, in a move seen as part of a plan to take over the South-based company. Later, Ajay Piramal took over as chairman, which was not appreciated by the management,  and several executives left the company. One of the decisions of a top-level reshuffle at Shriram Transport Finance reportedly led to as many as 7,000 people resigning in a span of six months. In July 2017, Piramal proposed a merger between Shriram Capital and IDFC Bank. The deal was called off later as the proposed swap ratio was not acceptable to Shriram Capital. Later, Piramal decided to exit the group.

According to industry experts, one reason why the deal may be getting delayed is due to the higher valuation. Interestingly, a consortium of Cosmea Financial and Piramal, which had submitted binding bids for Reliance Capital in November, had withdrawn from the race. According to media reports, RCap's lenders had decided to go for a fresh round of auction on April 4. A committee of creditors had set the base bid at Rs 9,500 crore on a net present value basis. Torrent was the highest bidder in the resolution plan and was against the lenders' plan to have a fresh round of bidding. Torrent had made an offer of Rs 8,650 crore for RCap, which includes Reliance Capital's 100 per cent stake in Reliance General Insurance and 51 per cent stake in Reliance Nippon Life Insurance.

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