Mumbai, Dec 13 (PTI) Shriram group on Monday announced the merger of Shriram Capital Limited (SCL) and Shriram City Union Finance Ltd (SCUF) with Shriram Transport Finance Company (STFC).
The merged entity, to be known as Shriram Finance Ltd, will be the largest retail finance non-banking finance company (NBFC) in the country, the group said. “Earlier today the boards of Shriram Transport Finance, Shriram City Union Finance and Shriram Capital Ltd met wherein they unanimously approved a proposal to merge three companies, paving the way for creating what would be largest retail NBFC in the country,” STFC Vice-Chairman and Managing Director Umesh Revankar told reporters.
Shriram Capital Ltd is the promoter of STFC and SCUF.
“The merger will enhance our distribution footprint across all business lines without incurring any incremental capex. The benefits likely to accrue due to synergy benefits and the digital initiatives are immense. This merger will also simplify our holding structure eliminating multiple layers,” Shriram Capital’s Managing Director DV Ravi said.
The group will soon be submitting a proposal to the shareholders of all the three entities and relevant regulators for their consideration.
Revankar said the expected timeline for completion of the proposed merger is 9-10 months.
The merger would help the group bring together all its lending products – commercial vehicles, two-wheeler loans, gold loan, personal loan, auto loan & small enterprise finance – under a single roof, a release said.
“The merger will help us to achieve a significant scale and growth for all our businesses. The synergies will result in incremental positive impact on our bottom line of around 10 per cent post merger,” Revankar said.
As per the proposed merger, Shriram Transport will issue 1.55 shares for every one share of SCUF and 0.09783305 share for every one share of SCL.
This will translate into SCL shareholders getting one share of STFC for every one share held by SCL in STFC. SCL shareholders will get 1.55 STFC shares for every one share of SCUF held by SCL, the group said in a release.
Post merger with STFC, the merged entity would have a combined asset under management (AUM) of over Rs 1.5 lakh crore, over two crore customers served till date and a distribution network of over 3,500 branches.
All customers of SCUF and STFC will, post-merger, be able to access all the products of the merged entities through the vast network of 3500+ branches and sales points of STFC and SCUF, the release said.
Shriram Finance will enhance its product basket with new products catering to a larger universe of both retail and SME customers.
The company intends to soon launch a Super-App where all its existing and new lending products would be offered under the Shriram Finance umbrella.
The group said Revankar would be the Vice-Chairman of the merged entity. Shriram City Union Finance’s Managing Director and CEO Y S Chakravati would be MD and CEO of the merged entity.
The board of STFC also approved the appointment of Parag Sharma as the CFO of the company and as a Whole Time Director on the board.
On November 30, the group had outlined its succession plan and announced creation of a board of management. The board of management will be responsible for defining the long-term strategy of the individual entities and the group and overseeing its execution. PTI HV MR
