PE Fund Investments
Shriram City Union, Shriram Capital to merge with Shriram Transport Finance
The boards of Chennai-based Shriram Transport Finance Ltd (STFC), a commercial vehicle financier, and Shriram City Union Finance Ltd (SCUF), a diversified NBFC in the underserved segment, and their promoter entity Shriram Capital Ltd (SCL) have cleared the merger of SCL and SCUF with STFC. Both SCUF and STFC are listed entities. The merger is subject to the approval of respective shareholders as well as regulatory approvals of the RBI, CCI, IRDA, NHB and the NCLT. Under the deal, STFC will issue 1.55 shares for every 1 share of SCUF, and 0.1 share for every 1 share of SCL. This translates into SCL shareholders getting 1 share of STFC for every 1 share held by SCL in STFC. They will also get 1.55 STFC shares for every 1 share of SCUF held by SCL. The merger is projected to help the group bring together all its lending products – commercial vehicles, two-wheeler loans, gold loans, personal loans, auto loans and small enterprise finance – under a single roof. The merged entity is expected to be the market leader in all the product and consumer segments that it operates in. Post deal, Umesh Revankar, Executive Vice Chairman and CEO of STFC, will be the Vice Chairman of the merged entity. YS Chakravarti, the MD & CEO of Shriram City, will be the MD & CEO of the merged entity. Morgan Stanley and ICICI Securities acted as financial advisors for the transaction. The valuation exercise was conducted by Bansi C Mehta & Co and Ernst and Young. EY also assisted in the restructuring and taxation assessment for the transaction. J&M Legal was the legal advisor. HSBC and JM Financial helped with the fairness opinion. PwC will help STFC and SCUF navigate through the postmerger integration process.
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