Personal chemistry sealed Piramal's investment in Shriram

When Ajay Piramal decided to invest in the Shriram group in 2010-11, it was not a smooth process; there was, in fact, even a decision not to go ahead with the deal. Piramal then could not have imagined himself taking over as chairman of Shriram's finance business and, eventually, a possible merger with IDFC Bank. In the event, Piramal invested over Rs 4,400 crore in Shriram Capital, the holding company of Shriram City Union and Shriram Transport Finance.

The Shriram group's founder, R Thyagarajan, released a book ''I am not an entrepreneur'': The R. Thyagarajan Story, in November 2016 recalling his journey, which quoted Piramal as saying till an investment banker told him the Shriram group was worth investing in he had not known much about Thyagarajan.

After a meeting with Thyagarajan, whom Piramal describes as a simple and straightforward man, he was convinced this was a man one could do business with. Piramal also came in at a time when Thyagarajan was considering what would happen to the group after him.

Thyagarajan says he felt he did not have a set of people who could take the group on the next leg of its journey, so when the opportunity came, and knowing Piramal's dynamic leadership, he thought it would be good for the group if he came on board.

For Piramal, the deal was special for a different reason. The  Piramal group wanted to enter the financial services space and Shriram was one of the best names that came up.  But in 2010-11, Shriram was just a name, a company Piramal wanted to find out more about. A year later, an investment banker said there was an opportunity to invest in Shriram.

Normally Piramal invests in a company for the long term only he has majority control. Here, he did not have majority control, in fact, his stake was less than that of Shriram Ownership Trust and another partner, Sanlam, a South African financial conglomerate. There was no clarity on the way forward. Observers said Piramal was merely an investor and not really involved in the management.

The book quotes Piramal as saying the investment was not a smooth process. In between, Piramal decided not to go ahead  because Thyagarajan wanted all his people in on the decision. “It was entirely based on trust,” Piramal says.

Thyagarajan says his decision to go with Piramal was perhaps also instinctive.

Thyagarajan is happy for the company to be known as an Ajay Piramal enterprise. The book quotes him as saying, “There has to be only one identity: an enterprise driven and led by Ajay Piramal.”

Today Piramal Enterprises owns 20 per cent of Shriram Capital, while Shriram Ownership Trust holds 45 per cent and Sanlam 26 per cent. The balance is held by other investors, including US private equity fund TPG Capital.