South Africa-based financial services major Sanlam Group is picking up 26% stake in Shriram Capital Limited, the holding company of entire financial services companies of Shriram group, for a consideration of $266 million. Interestingly, Sanlam group also happened to be JV partner for Shriram group’s life and general insurance companies with 26% stake each.
Shriram Capital is the holding company of all the group’s financial services activities including insurance (both life and non-life), vehicle financing, broking, wealth mangement, consumer financing, deposits mobilisation. A senior official of the Shriram Capital confirmed the developments, however, declined to elaborate further. It may be recalled that TPG, one of the major investor in Shriram group companies, also wanted to pick up some stake in Shriram Capital but not yet taken place.
Sources in the know told FE that the holding company will utilse the raised funds across all entities for expansion and working capital purposes apart from invest in infrastructure among other things. It is reliably learnt bsides the cash investment, Sanlam will also roll up its 26% stake in the general and life insurance ventures into Shriram Capital.
Currently, Shriram Capital holds majority stakes in both Shriram Life Insurance and Shriram General Insurance, which will shoot up further post this transaction. Shriram Capital, on a consolidated basis, has a customer base of over 65 lakh with 34,000 employees across 2,000 offices. The net profit is estimated at R1,000 crore, with assets under management of over R40,000 crore, said sources further.
On Thursday, LeapFrog picked up 10% stake in Shriram Credit, a wholly-owned subsidiary of Shriram Capital for $15 million. Shriram companies have been invested well major PEs at various stages and the group continue to raise funds for major growth across all the financial services areas, the sources added.
?A Sanlam investment in Shriram Capital better aligns the group?s interest with that of our India partner and provides Sanlam with access to the strong growth and profit-generating capacity of the financing entities. This investment is in line with our strategy to diversify both geographically and into broader financial services. We are pleased to build on our already strong relationship with Shriram, which has developed through our involvement with the two insurance entities over the past five years,? said Dr Johan van Zyl, Sanlam?s group CEO at the company meeting on Thursday.
