Shriram group announces merger of three companies

According to the scheme of amalgamation, Shriram Transport will issue 1.55 shares of the company for every 1 share of Shriram City Union and 0.09783305 share for each share of Shriram Capital.

The board of Shriram Transport also approved appointment of Parag Sharma, its chief financial officer, as a whole time director on the board.

In a major reorganisation, Shriram Group on Monday announced the merger of Shriram City Union Finance and promoter entity Shriram Capital with Shriram Transport Finance, subject to approvals from shareholders and regulators. The boards of the three companies unanimously approved the merger and announced that the new name of the merged entity will be Shriram Finance.

According to the scheme of amalgamation, Shriram Transport will issue 1.55 shares of the company for every 1 share of Shriram City Union and 0.09783305 share for each share of Shriram Capital.

The merged entity will have combined assets under management of over Rs 1.5 lakh crore, distribution network of over 3,500 branches and over 50,000 employees, according to a release.

YS Chakravarti, MD & CEO of Shriram City Union, would be the MD and CEO of the merged entity. Umesh Revankar, serving as the executive vice chairman and CEO of Shriram Transport, will be the vice chairman of the merged entity. The board of Shriram Transport also approved appointment of Parag Sharma, its chief financial officer, as a whole time director on the board.

The merger would help the group bring together all its lending products including commercial vehicle, two-wheeler, gold, personal, auto and small enterprise loans under a single roof, the release said. It added that the intent is to create a comprehensive cross-sell programme combining insurance, broking and other businesses.

Speaking to FE, DV Ravi, MD at Shriram Capital, said the group expects the merger to be completed by October-December in the next fiscal and that currently both Shriram City Union and Shriram Transport Finance are well capitalised above 22-23% range and the management does not anticipate any capital needs as of now.

When asked whether investors in the three companies are planning to offload some stake during the merger, he said, “They have not communicated. The way we have to look at it is that we are simplifying and de-layering the structure because that is the most elegant way of doing it. So, as a result of that, all the shareholders of Capital (Shriram Capital) automatically get into the operating company (Shriram Transport). That does not mean it is towards an exit proposition, because if you actually look at it, already some of the shareholders at Capital level hold direct stake in the operating companies and they have been holding it for a few years now, so certainly there is no intention of an exit.”

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