Shriram Finance Seeks Strategic Partner for Future Growth
The Chennai-based group is looking for a strategic partner to fuel its growth in the auto-focused non-bank lending space
Shriram FinanceStrategic PartnerAuto Focused Non Bank LenderGold Loan BusinessStable MarginsReal Estate MumbaiMay 27, 2024
The vice chairman, Umesh Govind Revankar, stated that they are looking for a strategic/financial partner for Shriram Finance, with a huge growth opportunity in their business. However, they have not started negotiations with anyone yet and have not disclosed a timeline for the same.
Revankar ruled out private equity players as their preferred choice, citing that PEs invest in listed companies, and their holding company Shriram Capital is privately held. He added that PEs demand higher stakes, but they will not go down below 25%. Therefore, a non-PE player would be a better fit for them.
It can be noted that Piramal Enterprises had invested in three Shriram businesses in 2011 but exited the stake through block deals in June 2023. Piramal also had a 20% stake in Shriram Investment Holdings, which the Chennai group is now trying to buy back.
On the reason for Piramal's exit, Revankar said that since there was no non-compete clause in the investment agreement, once they entered the financial sector on their own, it made better commercial sense.
Revankar expects loan growth to come in at least 15% and maintain stable margins at 9%. This optimism is based on the cost of funds marginally coming down from the second half, as he sees a rate cut in the third quarter. The auto sector exposure is as high as 82% for the company, but Revankar is comfortable with the current asset mix.
The company is planning to open 150 more branches this fiscal and wants to grow its gold loan book, which is only 2.8% or R6,300 crore as of end-March. They will raise at least R30,000 crore of additional capital from the market and through banks to fuel the 15% loan growth.
Shriram Finance is a leading non-bank lender in India, with a strong presence in the auto-focused lending space. The company has a diverse portfolio of commercial vehicles, two & four-wheelers, gold loans, and small business loans.
Shriram Group is a Chennai-based conglomerate with interests in general and life insurance businesses, wealth management, and real estate, apart from its flagship Shriram Finance. The group was founded by industry veterans Ramamurthy Thyagarajan, AVS Raja, and T Jayaraman in 1974.
Frequently Asked Questions
What is Shriram Finance looking for?
Shriram Finance is looking for a strategic/financial partner to fuel its growth in the auto-focused non-bank lending space
Why is Shriram Finance not keen on private equity players?
Shriram Finance is not keen on private equity players because they invest in listed companies and the holding company Shriram Capital is privately held Also PEs demand higher stakes but they will not go down below 25%
What is Shriram Finance's expected loan growth?
Shriram Finance expects loan growth to come in at least 15% and maintain stable margins at 9%
What is Shriram Finance's plan for its gold loan business?
Shriram Finance wants to grow its gold loan book which is only 2 8% or R6 300 crore as of end-March They will offer gold loans in 500 more branches this fiscal
How will Shriram Finance raise capital for its growth plans?
Shriram Finance will raise at least R30 000 crore of additional capital from the market and through banks to fuel its 15% loan growth
Related News Articles
Puravankara Boosts Bengaluru Presence with Seven-Acre Land Acquisition
Puravankara, a prominent real estate developer, has acquired a seven-acre land parcel in Bengaluru, underscoring its commitment to expanding its project portfolio and strengthening its market position in the region.
Indian Real Estate Sentiment Takes a Cautious Turn in Q2 2024
The residential market outlook in Q2 2024 remains optimistic, with 63% of respondents expecting a rise in residential prices, while the office market outlook exhibits buoyancy on all key parameters.
THDCIL Signs Rs.33,600 Crore MoU for Energy Storage
THDCIL signs a massive MoU for energy storage, paving the way for a significant boost in India's renewable energy sector.
Transforming Hinjewadi Pune: The Epicenter of Urban Living
Hinjewadi Pune's real estate market is booming, with property values expected to soar as infrastructure and amenities continue to improve.
Stebin Ben Purchases Luxury Duplex in Mumbai's Bandra for Rs 6.67 Crore
Indian playback singer Stebin Ben has made a significant real estate investment by acquiring a duplex in the prestigious Iconic 7 Co-op Housing Society in Bandra, Mumbai. This move highlights the ongoing trend of celebrities investing in prime properties
Housing Sales Fall 9% to 471,000 Units in 9 Major Cities in 2024
Housing sales across nine major cities have declined by 9 percent, reaching nearly 471,000 units in 2024. This drop is attributed to lower demand and a decrease in fresh supply.