Piramal bought 22 million shares of Shriram Transport, part of the $9-billion Shriram Group, in a deal worth Rs 1,652 crore through an open market transaction. Piramal Enterprises bought the stake from private equity major TPG.
Shares of Shriram Transport closed at Rs 760.5, up 3.6 per cent on the BSE. Piramal paid Rs 723 a share, a 1.15 per cent discount to the closing price of Rs 734.1 on Thursday.
In February, TPG sold half of its 20 per cent stake in Shriram Transport to a clutch of institutional investors and raised about $305 million. TPG Capital, through its arm Newbridge India Investments-II, owned 10.07 per cent stake in Shriram Transport before Friday’s sale.
The stake buyout is in line with Piramal’s strategy to strengthen presence in the NBFC business. Ajay Piramal, chairman, Piramal Enterprises, said, “We took interest in this company because we are interested in the financial services sector. We have made a significant investment already with our NBFC which is lending on Friday to real estate.”
Piramal has an NBFC, with a loan book of Rs 1,000 crore, focused on real estate, education-related infrastructure and medical equipment. The cash-rich group recently struck deals with infrastructure company Navayuga Road Projects and renewable energy firm Green Infra. Piramal Enterprises also bought 11 per cent stake in Vodafone India, the second largest telecom firm in the country by revenues, for Rs 5,863 crore last year.
Shriram Transport, one of India’s largest player in commercial vehicle finance, had revenues of Rs 7,014 crore and net profit of Rs 1,463 crore for the financial year ended March 31. The company had assets of over Rs 52,717 crore under management as of March 31, 2013.
Piramal said, “We believe in the strategy of the company and we are long-term investors in this. We were till now only in the wholesale space. This gives us an exposure to the retail space.” According to him, there is no immediate plan to increase stake in Shriram Transport.
Piramal’s NBFC business is spearheaded by A K Purwar, former chairman of State Bank of India, and Sudha Ravi, who had managed the Washington operations of State Bank of India.
Purwar, who was heading the private equity business of Piramal Group, was recently promoted as head of Piramal Capital, the holding company which runs the finance business of Ajay Piramal Group.
Piramal Group, which sold its domestic pharmaceutical business to Abbott for Rs 17,500 crore, had floated NBFC arm Piramal Finance in 2011.
India Venture Advisors, the private equity arm of Piramal Enterprises Ltd, is raising Rs 1,000 crore for a healthcare-focused fund. India Venture, founded in 2007 by Ajay and Purwar, focuses on health care and life sciences investments.
STRIKING A HEALTHY DEAL
* PE major TPG sold the stake in open market
* Shares bought at Rs 723 apiece
* TPG sold 10% stake in Shriram Transport in Feb for $350 mn