The Chennai-based Shriram Group continues to win over private equity investors. Merrill Lynch, ChrysCapital and Cambridge Place Investment Management up a total of 30 per cent stake in the group's retail finance company Shriram City Union. The three of them have invested Rs 192 crore ($42 million) in the company in return for 4 million shares each at a price of Rs 160 a share. Shriram City Finance is a listed company.
It plans to use the money to expand credit business in personal finance and small business segments in the coming year. City can leverage eight times the capital meaning a total capital power of Rs 1,500 crore. With the current deal, promoters' holding would come down to 54 per cent from 73.37 per cent. Merrill Lynch made its investment through its arm Indopark Holdings and Chrys Capital through Van Gogh. Spark Capital facilitated the deal.
Shriram group has roped in private equity investros to its other businesses too. For instance, ChrysCapital has stakes in the group companies Shriram Transport and Shriram EPC. UTI Venture recently invested $10 million in Shriram EPC where Bessemer Venture Partners has also invested, besides ChrysCap.
We previously discussed the importance of shareholder thresholds in Indian law. This is one area which differs dramatically in Indian law from the US law (such as in Delaware), where shareholder thresholds are not statutorily established. There are areas in Indian law, however,
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