Piramal in talks to sell stakes in Shriram group of companies

Ajay Piramal is in preliminary discussions with Anand Mahindra and others as he looks to exit from the Shriram group of companies, having been unable to achieve his ambitions in the financial services sector, said three people familiar with the matter.

On offer are stakes in three companies — Shriram Capital, Shriram Transport Finance and Shriram City Union Finance — valued at about Rs 9,000 crore, analysts estimate.

Piramal owns 20% in Shriram Capital and 10% each in Shriram Transport Finance and Shriram City Union. While Shriram Capital is an unlisted holding company, Shriram Transport specialises in financing second-hand trucks and Shriram City Union is into consumer lending. Piramal began investing in Shriram in 2013.


“Somehow Piramal hasn’t been able to do what he wanted to do at Shriram,” said one of the persons. “With all the investments, he did not get the management width that he would have liked to have.”

Piramal and Mahindra did not respond to queries. There’s no certainty that a transaction will take place, said the persons cited above.

Piramal and Mahindra to Gain
This is the second attempt by Piramal to reduce his involvement in Shriram. A planned merger with IDFC Bank failed amid regulatory and valuation hurdles in 2017.

“In the long run, if ever there is a Black Swan event, you do need a fallback and that’s where a bank will help,” Piramal had said while announcing the deal with IDFC Bank. The aim had been to create a financial conglomerate that could become India’s largest mass retail platform, delivering a full range of financial products.

The Times of India reported earlier this month that private equity firm TPG and Ajay Piramal’s Piramal Enterprises had launched a process to sell their stake in Shriram Capital, the holding company of the Chennai-headquartered financial services group. The move had drawn interest from bidders like KKR and global pension funds, it said.

A deal would be beneficial for both Piramal and Mahindra, said the people cited above.


Piramal has been frustrated by the inability to take full management control despite his initial investment of Rs 4,600 crore having doubled to about Rs 9,000 crore, yielding an annual return of 14.37%, they said. For Mahindra Financial Services Ltd, weighed down by bad loans, Shriram could offer the right opportunity for a growth spurt, they added.

Mahindra Finance has assets worth Rs 63,000 crore and a market valuation of Rs 25,584 crore. Its bad loans are at 7.7% of the total. Shriram Transport has assets of Rs 86,126 crore and a market value of Rs 26,590 crore. Shriram City is valued at Rs 11,411 crore and has assets of Rs 28,795 crore.

Piramal inherited a textile business in the 1980s. He entered the pharmaceutical business in 1988 with a modest capital of Rs 17 crore, growing it with the help of acquisitions. He sold most of the business to Abbott in 2010 in a deal valued at Rs 17,500 crore.

Piramal is open to discussions with other investors, including private equity and buyout firms, said the people cited above.