Shriram Group announces merger to create largest retail finance NBFC

Shriram Group is set to merge Shriram Capital Limited (SCL) with Shriram City Union Finance Limited and Shriram Transport Finance Co Limited, which will form the nation's largest retail finance non-banking financial company (NBFC).

SCL's subsidiary Shriram Transport Finance is the nation's biggest commercial vehicle financier, and Shriram City Union Finance is a diversified NBFC engrossed in lending money, especially to the underserved part.

The transaction is additionally likely to pave way for the eventual exit of the Ajay Piramal-led Piramal Group and private equity (PE) fund TPG, both of which are existing investors in Shriram Capital but have been looking to exit the firm for the last few years, after Shriram Group's unsuccessful merger attempt with IDFC Bank in 2017, which merged with private lender Capital First.

SCL, via its associates, has a customer base of at least 21.65 million, managed by approximately 67,000 employees across 4,000 branches. The firm recorded a net profit of Rs.4900 crore in FY2021 and has assets under management of more than Rs.2 trillion as of September 2021.

In a release, following a board meeting, the firm said that the merger will be conducted via a composite scheme of arrangement and amalgamation. As a part of the merger, Shriram Transport will release 1.55 shares for every 1 share of SCUF; 0.0978 shares for every one share of SCL. SCL shareholders will receive 1.55 STFC shares for every one share of SCUF held by SCL.

The merger is subject to the permission of shareholders of the three firms -- SCL, SCUF and STFC. The merger will assist Shriram Group to bring together all its lending products – two-wheeler loans, commercial vehicles, personal loans, gold loans, auto loans and small enterprise finance - under a single roof.

Additionally, the plan is to make a complete cross-sell programme, incorporating broking and asset management businesses, insurance, comprising their depositors, supported by a state-of-the-art technology platform, said the firm in the release.

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