The Hindu : Business : ChrysCapital picks up stake in 3 Shriram Group companies

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Thursday, Jan 06, 2005

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Business

ChrysCapital picks up stake in 3 Shriram Group companies

By Our Staff Correspondent

CHENNAI, JAN. 5. The Mauritius-based ChrysCapital has picked up 20.60 per cent stake in three Shriram Group's truck financing companies namely Shriram Investments Ltd (SIL), Shriram Transport Finance Co Ltd (STFC) and Shriram Overseas Finance Ltd, (SOFL).

Addressing a press conference here today, R. Thyagarajan, Chairman of the Shriram Group, said extra ordinary general body meetings of the shareholders of these companies had been convened on February 3 to consider the issue of shares to ChrysCapital by way of preferential allotment.

ChrysCapital would also be given an option to subscribe for an additional 4.34 per cent of equity, by way of warrants in SIL and STFC. It could exercise this option within 18 months. The preferential allotment, if approved by the shareholders, would be at about Rs. 35 per share in the case of SIL and STFC.

In the case of SOFL, it would be at Rs. 21 per share.

Mr. Thyagarajan said ChrysCapital's funds would help augment the Tier-I capital of these companies. The funds would be deployed for truck financing.

Mr. Thyagarajan said the investment in all the three companies would be Rs. 100 crores initially, which would go up by another Rs. 20 crores if ChrysCapital exercised the option before 18 months.

This preferential allotment would trigger the provisions of open offer under the takeover regulations and, consequently, ChrysCapital would have to acquire up to 20 per cent of equity of these companies through a public offer.

Considering the business potential and synergy in operations, the three companies might consider merger in a year or two, he said.

Citicorp Finance (India) Ltd of the Citigroup, UTI Bank, Reliance Capital, FMO (a Development Financial Institution from the Netherlands) have previously taken significant equity stakes in SIL and STFC.

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