In keeping with its interest in the financial services sector, Piramal Enterprises has picked up 10 per cent equity in Shriram Transport Finance Company (STFC), a commercial vehicle financier.
The Piramal group will fork out Rs 1,652 crore to buy the stake from private equity firm TPG. The transaction was through a block deal in the market, with the Piramal group picking up about 2,28,47,468 shares at Rs 723 per share.
Flush with funds
Speaking from London, Chairman Ajay Piramal said the group will not invest in any other sector beyond healthcare, information management and financial services.
Piramal Enterprises, the erstwhile Piramal Healthcare, is flush with funds after it sold its domestic medicines business to Abbott for about Rs 17,000 crore in May 2010.
The group has since been investing in or acquiring companies in the above-mentioned sectors, besides making short-term investments, such as the 11 per cent equity it picked up in telecom major Vodafone.
The latest transaction will be financed by funds coming in from the Abbott deal, Piramal said. For four years after the Abbott deal, the Piramal group is slated to get $400 million every year.
Long-term investment
The investment in Shriram Transport is long-term, Piramal said, adding that what attracted them to the company was that it was a strong player in a niche market and, besides, its priority sector lending had a social face to it, given that it finances truck owners in small towns.
The Piramal group’s plan for a banking licence remains; they were “looking at it” but are still undecided, Piramal added.
The top management at STFC said it had no comment on the deal.
UBS was the advisor for the latest Piramal transaction.