Mumbai, Sept. 20: Chennai-based Shriram group today said Newbridge Capital has offered to invest close to $100 million (Rs 448 crore) in its truck financing companies ? Shriram Investments Ltd, Shriram Transport Finance Co Ltd and Shriram Overseas Finance Ltd.
The investment will be routed through Shriram Holdings (Madras) Pvt Ltd, the holding entity for the truck finance companies. Newbridge will pick up a 49 per cent stake in the holding company.
Shriram group chairman R. Thyagarajan said, “The investment by Newbridge in Shriram Holdings will help augment the tier-I capital of the truck finance companies and help Shriram build the transportation infrastructure as well as modernise the trucking fleet in the country.”
An extraordinary general meeting of the three truck finance companies has been convened on October 17 to consider the issue of equity shares to the holding company by way of a preferential allotment, after the board of directors approved Newbridge Capital’s investment.
Shriram Holdings would also be given an option to subscribe for additional equity, by way of warrants by Shriram Investments and Shriram Transport, which can be exercised by them before the expiry of 18 months.
The total investment in the three companies would be Rs 300 crore in the first round, which would go up by another Rs 175 crore, if the option was exercised before the 18 months expiry period by Shriram Holdings.
The preferential allotment will trigger the provision for open offer under Sebi takeover rules and, consequently, Shriram Holdings will have to acquire up to 20 per cent equity in these companies through a public offer, which is likely to be made in December.
The truck finance companies are in the midst of a merger process. The merger of Shriram Investments Ltd into Shriram Transport Finance is likely to be completed by November, while the merger of Shriram Overseas Finance into Shriram Transport will be completed next fiscal.
Following this, Shriram Transport Finance will become the largest listed non-banking finance company in the country.
