"We will get two seats on the board. Irrespective of ROFR, we are working towards seeing that how we can be really good and effective partners," Ajay Piramal, Chairman, Piramal Group said.
10 percent infusion is through fresh equity, 10 percent is through Shiram stake sale
Ajay Piramal
Chairman
Piramal Group
Flushed with cash after bumper returns from the Vodafone stake sale, the Ajay Piramal led Piramal Enterprises is all set to acquire 20 percent stake in Shriram Capital. The acquisition is valued at over Rs 2,000 crore. CNBC-TV18 was the first one to break this news .
Post the deal announcement, CNBC-TV18's Manasvi Ghelani spoke to Ajay Piramal, Chairman, Piramal Group and R Thyagarajan, founder, Shriram Group about the deal and way forward.
Below is the verbatim transcript of the interview
Manasvi: Is the capital infusion through fresh equity or offer from shareholders?
Piramal: It is partly through fresh equity which is half of it. So, 10 percent is through fresh equity and 10 percent is the existing Shriram ownership trust is selling us 10 percent of their stake.
Manasvi: Does that in any way affect your shareholding pattern in the company?
Thyagarajan: Obviously it will have an impact, a very favourable impact on the shareholding pattern. We believe in partnership. We believe that eventually partner should have more or less equal financial stake; that helps the partnership to grow. With Piramal Enterprises coming – our holding comes down significantly. Our other partners in this are, Sanlam Group of South Africa and probably they would like to increase their stake so that they would like to remain at about 26 percent. TPG is an investor; I wouldn't say they would be there in the long run but they are an investor. So, everybody's shareholding to some extent would be affected because of this.
Mansavi: You said that Sanlam would like to increase its stake. Will it be at 26 percent or will there be an increase that you are expecting and by how much?
Thyagarajan: Sanlam would like to increase the stake in the insurance ventures as and when the government permits it. They are restricting their investment in Shriram Capital to the extent of 26 percent because they cannot go beyond 26 percent because it will affect their ownership of the insurance entities and therefore regulatory constraints are there. However, with regards to the other partners like Piramal Enterprises coming in over the next few years, I hope or I think it will happen that we will be moving towards an equal ownership; it should happen and if it happens it will be good.
Manasvi: This 20 percent does give you some sort of holding now. Can we expect an open offer in the near future?
Piramal: I don't think there is an open offer requirement. As and when the regulations provide, we will always be willing to comply with.
Manasvi: Talking about the board arrangement how many seats does this give you and what special rights are we looking at, does that include ROFR?
Piramal: It gives us two board seats and there is an Right of first refusal (ROFR), but irrespective of ROFR we are working towards seeing that how we can be really good and effective partners.
Piramal Enter stock price
On April 17, 2014, Piramal Enterprises closed at Rs 600.00, up Rs 4.15, or 0.70 percent. The 52-week high of the share was Rs 648.30 and the 52-week low was Rs 476.00.
The latest book value of the company is Rs 611.71 per share. At current value, the price-to-book value of the company was 0.98.
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