Piramal Group has picked up US-based private equity investor TPG Capitals entire 10% stake in Shriram Transport Finance via the open market in a block deal for R1,652 crore. It bought 2.28 crore shares of Shriram Transport Finance at a price of R723 a share, which is at a 1.5% discount to the stock close of R734 on BSE on Thursday.
Piramal had earlier announced its foray into the financial services business and is already for lending to real estate and education sectors.
We are already lending to the real estate and education sector and are planning to increase the presence to other sectors as well, Piramal Enterprises chairman Ajay Piramal said. Shriram Transport Finance is the countrys largest lender to the transport sector.
Acquisition of this stake in Shriram Transport is in line with our strategy for building our presence in financial services sector, said Piramal. We have no plans to increase the stake in the company, he added.
The deal marks the exit of the US-based PE firm from the group and is believed to have given them five-times return on their total investment. In 2006, TPG had bought a 49% stake in parent firm Shriram Holdings Madras with a total investment of about R550-600 crore in the transport company. In 2011, TPG Capital had expressed interest to sell some of its stake.
To facilitate the exit of the PE firm from the Shriram Transport Finance board in December 2011 approved a plan to merge with its unlisted parent Shriram Holdings. After the merger, TPG Capital owned a 20% stake in the merged entity Shriram Transport Finance.
In February, TPG sold 10% in Shriram Transport at R715 a share to overseas and domestic institutional investors to raise about R1,662 crore.