Flush with funds, Ajay Piramal-led Piramal Enterprises will shell out ₹2,014 crore to pick up a 20 per cent stake in Chennai-based Shriram Capital Ltd (SCL).

The unlisted holding company for five financial service entities of the Shriram Group, including Shriram Transport Finance Co, and its insurance ventures, SCL could be the vehicle for Piramal’s plans to foray into truck financing, retail brokerage, insurance, consumer finance and banking segments.

SCL will issue Piramal Enterprises fresh shares leading to the latter picking up a 10 per cent stake in the former. Simultaneously, Shriram Group’s Shriram Ownership Trust will sell a portion of its shareholding in SCL. Piramal will hold two board seats in SCL.

After the deal, SCL’s new shareholding will be: South Africa-based Sanlam Financial Services (23 per cent); Piramal Enterprises (20 per cent); Shriram Ownership Trust (53 per cent); and private equity player TPG (sub-10 per cent).

Piramal Enterprises operates across multiple verticals within healthcare, life sciences and drug delivery systems, healthcare information management, financial services and contract manufacturing services.

SCL’s operating entities have a customer base of over nine million, assets under management of over ₹78,000 crore, more than 53,000 employees and a net profit of ₹800 crore.

Terming the deal a long-term investment, Ajay Piramal, Chairman of Piramal Enterprises, said: “There are lot of investment opportunities in the financial services space. The returns from this investment will be superior to our other investments.”

Last week, Piramal had exited Vodafone India, raking in ₹8,900 crore.

The company is slated to get another ₹2,000 crore later this year, as the last tranche of payment from multinational drug-maker Abbott Laboratories.

Piramal had sold its domestic medicines business to Abbott in 2010 for ₹17,000 crore, and part of the payment was staggered over four years.

Future plans In May 2013, Piramal had invested ₹1,636 crore to pick up nearly 10 per cent in Shriram Transport, a non-banking finance company (NBFC) in the Shriram Group.

Piramal’s future plans for investment are in the financial services, drug discovery and data analytics segments.

He has exited the defence sector.

Biz expansion R Thyagarajan, Founder of Shriram Group, said: “We plan to deploy the funds in our new initiatives or for extending our existing business… We would be happy to extend insurance to neighbouring countries with the help of our African partner, which wants to enter Asia.”

Shriram Group would be interested in getting a bank licence in the differential licensing category once the RBI guidelines are out.

“We would welcome the opportunity (to get a bank licence), though we are not obsessed with getting one,” he added.

Piramal said there are no plans as of now to merge its existing NBFC Piramal Capital with Shriram Capital and it will operate independently.

“Banks are not allowed to fund real estate, for instance, so there is an opportunity (for NBFCs). Besides, in the infrastructure segment, there are many unfinished projects and we will try to leverage it over time.”

In the last one year or so, the Indian financial sector has become a very good space to invest in, especially in the area of structured financing, he added.

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