Shriram Group details long-awaited corporate restructuring
The Shriram Group has announced a long-awaited reorganization of its corporate structure, which will involve the merger of two of its listed entities.
According to his announcement:
Merger of Shrilekha Business Consultancy Pvt. with Shriram Capital. Shrilekha’s business is to hold long-term investments.
Separation of financial services, life insurance, general insurance from Shriram Capital.
Merger of Shriram Capital (with the remaining companies) with Shriram Transport Finance Ltd.
Merger of Shriram City Union Finance Ltd. with Shriram Transport Finance.
Shriram Capital, a private entity, has until now been the holding company for the group’s activities ranging from financial services and insurance to asset management. Shriram Capital owns approximately 25.56% of Shriram Transport Finance and 33.86% of Shriram City Union Finance, according to exchange data.
The share exchange ratio determined as part of the transaction is as follows:
Merger of Shriram Capital with Shriram Transport Finance: For every 10,000,000,000 shares of Re 1 each of Shriram Capital, 97,83,305 shares of Rs 10 each of Shriram Transport Finance will be issued.
Merger of Shriram City Union Finance with the company: For every 100 shares of Rs 10 each of Shriram City Union, 155 shares of Rs 10 each of Shriram Transport Finance will be issued.
“This program is being undertaken to reorganize the activities of the group in order to allow targeted growth strategies and an injection of capital for each vertical”, indicates the exchange file.
The Shriram group, founded in 1974 by R Thyagarajan, had a complex holding structure. Besides the stake that Shriram Capital has in entities ranging from finance to insurance, the holding company itself has diversified ownership.
According to a note from Crisil dated April 2021, the shareholders of Shriram Capital are the Shriram Ownership Trust (29.7%), the Shriwell Trust (13.2%), the Sanlam group (26%), the Piramal group ( 20%) and TPG (9.4%).
For some time now, the group has been trying to simplify its corporate structure, which would allow investors to exit.
On November 30, the group had detailed a succession plan for the group.
Promotion of the Shriram Group has already been transferred to Shriram Ownership Trust, which owns a stake in Shriram Capital Ltd. This promotion belongs to the trust and not to an individual or a family, the group said.
The trust will be managed by a board of directors of four people within the group:
DV Ravi (Managing Director, Shriram Capital)
Jasmit Gujral (MD, Shriram General Insurance Co.)
Umesh Revankar (MD, Shriram Transport Finance Co.)
R Duruvasan (former Managing Director, Shriram City Union Finance Ltd.)
Founder Thyagarajan has said he intends to step down from a formal role within the organization and only play a mentoring role here.
The group also announced the appointment of Parag Sharma as Deputy Managing Director and Chief Financial Officer of Shriram Transport Finance. In addition, YS Chakravarti has been appointed additional director.