Private equity player Premji Invest is set to buy a 2.2% stake in Aditya Birla Capital for Rs 704 crore, the holding company of the financial services businesses of Aditya Birla group said in a release on Thursday. This is as per a definitive share subscription agreement (SSA) the company has entered into with Premji Invest’s PI Opportunities Fund – 1. The proposed transaction values Aditya Birla Capital at Rs 32,000 crore.
The release said the company had entered into a composite scheme of arrangement with Aditya Birla Nuvo, the group’s retail arm, and Grasim Industries, its cement business. Under this scheme, the financial services undertaking of Grasim will be transferred to and vested in Aditya Birla Capital by way of a demerger which will come into effect on July 4. Subsequent to that, the latter will be listed after obtaining necessary approvals.
“In accordance with the scheme, on or prior to July 4, 2017, the company is permitted to issue additional equity shares to one or more financial investors,” the release said. Earlier this month, the Aditya Birla group told analysts that Aditya Birla Capital will be listed by the end of August. Grasim will hold a 57% stake in the listed entity, while 25.6% will be held by the public. The rest will be owned by promoters.
According to a JP Morgan note dated June 26, Aditya Birla Capital plans to increase the combined share of SME and retail assets in its NBFC book to 50% from 30% at present. The note said the management expects profitability and growth in the listed entity to be driven by a rating upgrade, the shift in the lending mix in favour of retail and SME, a change in the product mix, operating leverage in insurance business and break-even in new businesses.