Newbridge wraps up Shriram deal

Shriram Holdings (Madras), a part of the leading financial services conglomerate Shriram group, today approved the sale of 49 per cent stake to Newbridge Capital for $100 million,

Earlier, in September 2005, Newbridge Capital evinced interest in pick up the equity stake in the exclusive holding company for truck finance firms.

SHMPL subscribed to 2,44,78,681 equity shares of Shriram Transport Finance Co (STFC) at Rs 112 per share and 48,68,378 shares of Shriram Overseas Finance (SOFL) at Rs 67.20 per share by way of preferential allotment.

SHMPL also subscribed to 1,60,00,000 warrants in STFC with an option to subscribe to equity shares that can be exercised before the 18-month expiry.

STFC Managing Director R Sridhar said in a press statement: "This investment by Newbridge will help enormously in facilitating growth and profitability of the company and will help Shriram in channelling more resources into the pre-owned trucks market, leading to modernisation of the trucking fleet of the country."

Puneet Bhatia, managing director, Newbridge Capital, said, "Shriram is a leader in the Indian commercial vehicle financing space, which is poised to grow rapidly over the next few years in line with the strong economic and trade growth. We are very pleased to partner with it to help harness this growth, as also to explore other ancillary opportunities and believe the respective strengths of the partners will create a truly extraordinary platform."

In a meeting at Chennai today, the STFC and the SOFL boards approved allotment of shares and warrants to SHMPL. Total investment in STFC and SOFL in the first round would be Rs 324.80 crore, which would go up by another Rs161.28 crore on exercise of the option by SHMPL within 18 months.

The preferential allotment would trigger the open offer under the provisions of takeover regulations and, consequently, SHMPL would have to acquire up to 20 per cent of equity of these companies through a public offer, likely to come out in April or May.

The merger of Shriram Investments with STFC was completed in November 2005. The boards of STFC and SOFL have now decided to merge SOFL with STFC and expect that the merger will be completed by June 2006.

Earlier, Citicorp Finance (India) of the Citigroup, UTI Bank, Reliance Capital, FMO (a Netherlands development financial institution) and Chrys Capital had taken significant equity stakes in STFC.

SMOOTH RIDE

Shriram Holdings subscribed to 2,44,78,681 shares of Shriram Transport Finance at Rs 112 per share

Total investment in Shriram Transport and Shriram Overseas in the first round would be Rs 324.8 crore