Indian Shadow Lender Shriram Group to Merge Its Two Listed Lending Units
Shriram City Union Finance to be merged with Shriram Transport Finance Co.
(Bloomberg) -- Shriram City Union Finance Ltd., an Indian shadow lender, is merging with Shriram Transport Finance Co. in a restructuring that the group said will create the largest shadow lender to consumers in the country.
The swap ratio has been fixed at 100 Shriram City shares for 155 Shriram Transport shares, according to an exchange filing Monday. Shares of Shriram City surged as much as 10.5% following the announcement, while those of Shriram Transport fell 6.3% in Mumbai trading.
The merger comes when India’s retail lending is picking up with consumers wanting to splurge on everything from two-wheelers to homes as recovery takes hold in Asia’s third-largest economy after the pandemic-induced slump. The deal could also help investors in the group, including billionaire Ajay Piramal and private equity firm TPG Capital, to cash out, Bloomberg News reported last month, citing people familiar with the matter.
The name of the merged entity will be changed to Shriram Finance Ltd. and will have assets under management of about 1.5 trillion rupees, according to the filing. The merger would help the group bring together all its lending products under a single roof and cross-sell products, it said in an emailed statement. Shriram Transport is a financier of new and pre-owned trucks, while Shriram City funds consumer goods and motorcycles purchases.
Shrilekha Business Consultancy Pvt. will also be merged with promoter firm Shriram Capital Ltd., according to the filing. Shriram Capital’s financial services, life insurance and general insurance businesses will be demerged as part of the restructuring. The restructuring is subject to approvals from shareholders and regulators, the group said in the filing.
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