Piramal to exit Shriram Finance, sell 8.3% stake for Rs 4,630cr

MUMBAI: Piramal Enterprises, which last year acquired a non-banking finance company (NBFC) licence, is selling its entire 8.34% holding in Shriram Finance through block deals on Wednesday. At a floor price of Rs 1,483 per share, Piramal Enterprises will get at least Rs 4,630 crore (about $564 million) from this sale, the term sheet for the deal showed.

In 2013, Piramal Enterprises had bought a 9.9% stake in Shriram Transport Finance, a 20% stake in Shriram Capital the following year and 9.9% in Shriram City Union in 2018.

However, after the merger of Shriram Group's various entities into Shriram Finance, the Piramals had decided to exit the south India-based financial services major.

According to the term sheet for the block deal, Piramal Enterprises is offering about 3.1 crore shares of Shriram Finance at a minimum price of Rs 1,483 per share, which is at nearly 5% discount to the stock's Tuesday closing of Rs 1,559. The block is set to be sold on Wednesday.

This is the second block deal in Shriram Finance this week. On Monday, US-based private equity firm TPG sold 2.65% in the company. The major buyers for the block were funds managed by Morgan Stanley, Goldman Sachs and some of the large domestic mutual funds, sources said.

Wednesday's block trade is being managed by Morgan Stanley.

Although selling of a large chunk of shares usually leads to some slide in stock prices, for Shriram Finance it could be the reverse. According to a note by a domestic broking house, the recent spate of selling ends the supply overhang on Shriram Finance. "The recent euphoria in NBFCs, and the huge upside potential in Shriram Finance, sets the stage for a quick 25-30% rally" in the stock.

The deal is also seen as a positive move for Piramal Enterprises, "as the cash from Shriram Finance stake sale can now be used for any inorganic opportunities or returned to shareholders", the note said. In Tuesday's flat market, Shriram Finance and Piramal Enterprises both had rallied over 6%.


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