Japan’s Orix Corporation may pick up US-based Texas Pacific Group (TPG) Capital's stake in Shriram Transport Finance Company Ltd (STFCL).
The transaction is estimated to be valued at Rs 3,000 crore — five times the money invested by TPG when it picked up the stake in STFCL five years back. The current transaction may trigger an open offer, said a senior company official.
R Sridhar, managing director, STFCL said: “They (TPG) are looking to exit and were looking for a suitable buyer. We heard only Orix's name, though we did not have any official meeting with either of them.”
TPG came aboard Shriram Transport by picking up a 49 per cent stake in Shriram Holdings (Madras) Ltd, while the 51 per cent remained with Shriram Promoters. Shriram Holdings (Madras) Ltd is holding 42 per cent stake in Shriram Transport Finance Company Ltd.
TPG’s holding in Shriram Transport is 20 per cent, while Shriram Promoters is 22 per cent. The PE-firm invested around Rs 550-600 crore, in two tranches, including $100 million in 2006 and the rest in 2007 through warrants.
TPG was planning to exit in 2008 when Shriram Transport’s stock was quoted at Rs 800 a share. However it did not happen. The stock price of the company this morning was Rs 623 on the Bombay Stock Exchange — up by 3.36 per cent. When TPG entered the company the price was at Rs 112. “For any PE player a five-year period is a long horizon, and TPG is going to exit with five times of their investment which is a good deal for them,” said Sridhar.
Asked whether the proposed acquisition would lead to an open offer, Sridhar said, the company may or may not.
Shriram group companies have always been one of the favourites for TPG. Recently, the company had picked up a 15 per cent shareholding in Shriram Properties, the realty arm of the Shriram Group, for Rs 50 crore.
TPG investments in other Shriram Group firms include 15 per cent stake in Shriram Capital, 49 per cent stake in Shriram Retail Private Holdings and 28 per cent in Shriram Citi Union Finance. In March, the private equity firm had acquired the assets of Vishal Retail for Rs 70 crore through Shriram Retail.
Shriram Transport, a truck financier, reported a 40 per cent growth in net profit to Rs 1,229.88 crore during the year ended March 31, 2011, compared to Rs 873.12 crore, a year ago. The company's total income rose by 20 per cent to Rs 5,429.65 crore from Rs ,495.89 crore.
The NBFC arm of Shriram Group assets under management stood at Rs 6,183 crore, including Rs 19,866 crore on-book and Rs 16,317 crore of off-book assets.
STFCL’s secured non-convertible debenture (NCD) issue closed from June 29. The NCD issue, which opened for subscription on June 27, was supposed to close on July 9. The NCD issue was worth Rs 500 crore with an option to accept oversubscription to the extent of Rs 500 crore.
