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Shriram Capital looks to merge Shriram Transport and Shriram City Union Finance by June

Shriram Capital looks to merge Shriram Transport and Shriram City Union Finance by June

Shriram Capital looks to merge Shriram Transport and Shriram City Union Finance by June
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By Abhishek Kothari  Apr 10, 2019 4:20:04 PM IST (Published)

Shriram Capital has decided to merge Shriram Transport Finance and Shriram City Union Finance by June 2019, sources told CNBC-TV18.

Shriram Capital has decided to merge Shriram Transport Finance and Shriram City Union Finance by June 2019, sources told CNBC-TV18.

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Shriram Transport, in a statement, said, “These discussions are there for quite a long time. There’s is no new development as of now.”
Sources further said the merged entity help the company raise its bank borrowing limits and will not require any additional capital for the next one year as Tier 1 capital ratio of Shriram City Union Finance is at 23 percent while that of Shriram Transport is at 15 percent. Tier 1 capital is the primary funding source of a lender and consists of shareholders' equity and retained earnings.
Moreover, Piramal Enterprise is looking to sell its stake of 10 percent each in Shriram Transport and Shriram City Union Finance, sources said, adding, “Piramal is believed to have been in talks with private equity firm KKR for the stake sale.”
KKR has shown interest in the Shriram companies and has already completed the due diligence.
Shriram Capital, Piramal Enterprises and KKR did not respond to CNBC-TV18’s queries.
This is not the first time Shriram Group has tried to merge the two non-banking financial companies (NBFCs). In July 2018, PTI reported Shriram group was in early stages of discussions for the said merger. The parent company was looking to merge the two by April 2019.
Shriram Transport Finance caters to customers who want to buy commercial vehicles like trucks while Shriram City Union Finance offers loan products to small businesses and retail loans like gold ornaments.
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