Newbridge Capital takes 49-per cent stake in Shriram Holdings invests additional Rs448 crore

22 September 2005

Chennai: Overseas investment companies are flocking to the Shriram group. The latest is the Newbridge Capital that manages over $2 billion. The company has taken 49 per cent stake at a sizeable premium in Shriram Holdings (Madras) Private Limited.

Shriram Holdings is the holding company for the group's three truck financing outfits viz Shriram Transport Finance Company Limited (STFC), Shriram Investment Company Limited (SIL) and Shriram Overseas Finance Limited (SOFL). Interestingly Shriram Holdings is in turn a subsidiary of Shriram Financial Services Holdings Pvt Ltd.

As per the deal Newbridge would invest $100 million (Rs448 crore) in the three truck financing companies and also acquire the 49 per cent stake in Shriram Holdings.

According to R Sridhar, managing director, STFC, "The Newbridge funds will first come to Shriram Holdings. And from there the three operating companies would get their share." In the first round of funding totaling Rs300 crore, STFC would get Rs140 crore, SIL Rs130 crore and SOFL Rs30 crore. The additional funds would enable the group to lend upto Rs7,500 crore.

The three financing companies will also consider a preferential convertible warrant issue to Shriram Holdings. If the later exercises the option then the additional funds infusion in the three companies would be to the tune of Rs175 crore.

The preferential issue would invite open offer provisions of the take-over regulations and Shriram Holdings will acquire 20 per cent of the public holding in the operating companies.