Piramal in talks to sell stake in Shriram group companies: Report

Billionaire chairman of Piramal Enterprises, Ajay Piramal is planning to sell his stake in Shriram group companies at a valuation of Rs 9,000 crore.

The news reports of the proposed sale comes at a time when Shriram Transport failed to get any lenders in the syndication for its bond issue last week despite increasing the margin on the facility to Libor plus 195 basis points from Libor plus 140 basis points. Shriram Transport had to scale down its issue from $500 million to $350 million.

In fact, some of the lenders are seeking to sell the loan portfolio via secondary trades, Bloomberg said citing unidentified sources. The bankers to the issue -- Deutsche Bank, HSBC, ICICI Bank, Kotak Mahindra and StanChart -- held on to their original commitment of $70 million each for the secured term loan.

On Tuesday, The Economic Times reported that Piramal wants to exit his stake and is in talks with Anand Mahindra, Chairman of Mahindra group. Both declined to comment on the report. Piramal is looking to sell his holdings in Shriram Capital, Shriram Transport Finance and Shriram City Union Finance from quite some time.

In December 2014, Piramal Group picked up US-based private equity investor TPG's 9.9 percent stake in Shriram Transport through block deals in the open market for Rs 1,652 crore. Its 10 per cent stake today is worth Rs 2,638 crore taking Tuesday’s market value of Shriram Transport. In September last year, media reports said Piramal is in talks with global private equities -- Blackstone and KKR to sell his stake.

Piramal Enterprises also owns 20% stake in unlisted Shriram Capital and 10 per cent each in Shriram Transport and Shriram City Union. Shriram Transport is trading at Rs 1161 a share as on Tuesday while Shriram City Union was quoting at Rs 1729 a share.

On April 9th, R. Thyagarajan, founder of Shriram Capital Group, said the Indian company is getting close to merging its listed units so that the merged entity can boost its lending and insurance businesses.

Unlisted Shriram Capital is considering combining with its publicly traded units Shriram Transport Finance Co. and Shriram City Union Finance Ltd. The transaction will ultimately result in the holding company getting listed, Thyagarajan said without giving a timeline for the transaction. “When Ajay came in he asked about merger, now we are nearer to the time,” Thyagarajan. The buy-in is taking place,” he said. Piramal can continue to remain as the Chairman even if he sells his stake.

The deal will give an opportunity to the private equity major, TPG and Piramal to exit. Piramal Enterprises Ltd tried and failed to combine the Chennai-based group with IDFC Ltd. two years ago.

In July last year, Shriram Transport shareholders got a shock when the company disclosed a non-funded exposure of Rs 870 crore to a Shriram group entity in its latest FY18 annual report. This exposure was towards Shriram Ventures (SVL- an infra asset vertical), which is the promoter of a company Shriram EPC, which is stressed and has undergone corporate restructuring. It had also been part of NCLT proceedings. This was a new detailed disclosure and was not part of FY17 annual report. It was later clarified that another Shriram group’s private entity will take over the exposure.