Piramal acquires 20% stake in Shriram Capital for Rs2,014 crore

Piramal Enterprises Ltd has acquired a 20-per cent stake in financial services firm Shriram Capital Ltd for Rs2,014 crore (about $335 million), the two companies said in a joint release.

Piramal Enterprises Limited, formerly known as Piramal Healthcare Limited, is the flagship company of Mumbai-based Piramal Group.

Shriram Capital Ltd (SCL) is the overarching holding company for the financial services and insurance business of the Chennai-based Shriram Group.

Piramal had invested Rs1,636 crore in May last year to acquire 9.9 per cent equity in Shriram Transport Finance Company Limited, one of the listed NBFCs forming part of the Shriram Group.

''This investment builds our presence in financial services sector and we see long-term shareholder value creation from our partnership with Shriram Capital. The company is well known for its culture and values, which resonates well with Piramal Group's philosophy,'' Ajay Piramal, chairman of Piramal Enterprises Limited, said commenting on the investment.

''Shriram Group has pioneered providing financial services to the under-served section of the economy. Our success over the last four decades has been possible only through strategic partnerships. Piramals' entry into Shriram Capital is a significant milestone for the financial services businesses to take a quantum leap in the group's contribution to the community at large,'' R Thyagarajan, founder of Shriram Group, said.

Shriram Capital's operating entities have an overall customer base in excess of 9 million, more than 53,000 employees across 2,600 offices, net profit of Rs800 crore with assets under management (AUM) in excess of Rs78,000 crore.

Ajay Piramal, who sold his pharmaceuticals business to Abbott Laboratories for $3.8 billion in 2010, has been investing that money mostly in financial services business (See: Abbott is India's biggest pharma firm after $3.7-bn Piramal deal).

Earlier this month, Piramal Enterprises also sold its 11 per cent stake in Vodafone India to UK's Vodafone Group Plc for Rs8,900 crore.

UBS was the sole financial advisor to Piramal for this transaction.

Amarchand & Mangaldas & Suresh A Shroff & Coacted as sole legal advisors to Piramal Enterprises. Trilegal acted as sole legal advisor to Shriram Capital.