SREI Infrastructure Finance plans to list its wholly-owned subsidiary company SREI Equipment Finance through amalgamation and demerger.

According to Hemant Kanoria, Chairman and Managing Director, the company’s board on Monday approved a composite scheme of arrangement and amalgamation which will result in listing of its equipment finance business. The scheme will be subject to regulatory, statutory and other necessary approvals.

“The entire process is expected to be completed in the next six months to one year,” Kanoria told newspersons here on Monday.

SREI had earlier planned to list its subsidiary through an initial public offering and had also received a nod from the Securities and Exchange Board of India. However, the IPO plan was put on hold due to weak market sentiments.

The present scheme approved by the board contemplates demerger of the leasing business of SREI Equipment to SREI Asset, and the remaining business of the company, which is asset finance, will amalgamate into SREI, post which SREI Equipment will stand dissolved without being ‘wound up’, the company said in a regulatory filing to stock exchanges.

Proportionate shareholding

On completion of amalgamation, the lease, rental and equipment finance business of the company will demerge into SREI Asset. Pursuant to this, promoters and public shareholders of SREI Infrastructure will be allotted shares in SREI Asset in their existing proportionate shareholding.

The proposed capital augmentation scheme is expected to infuse around ₹500 crore in the equipment finance business.

SREI Asset has applied for a change of its name to SREI Asset Finance Pvt Ltd and intends to subsequently convert itself into a public company.

Consolidation of leasing and equipment finance business in SREI Asset will result in concentrated management focus, integration of business operations, greater financial strength and maximisation of overall shareholder value.

The scheme will enable shareholders of SREI Infrastructure to continue as shareholders of both SREI Infra and SREI Asset, thereby unlocking the value of SREI Equipment for shareholders of SREI Infra.

As of September 2018, the assets under management of SREI Equipment was ₹34,001 crore, while the same for its infrastructure finance business was around ₹18,890 crore.

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