TPG India Investments II Inc sold 9.92 million shares, or a 2.65% stake, in Shriram Finance on Monday at Rs 1,401 per share, valuing the transaction at Rs 1,390 crore ($170 mn) in a block deal on the BSE. Shares of Shriram Finance rose 7% intra-day. The stock closed nearly 5% higher at Rs 1,471 on the National Stock Exchange. On the BSE, it closed up 4.89% at Rs 1,469.60.
Buyer details were not disclosed in the block deal data. The sale has occurred at a zero discount to market price, indicating that the demand was strong, Shriram Finance executive vice chairman Umesh Revankar said. “TPG has been a long-term partner for Shriram Group for more than 15 years. They still remain partners in the group’s insurance business. We believe they will look to deepen the relationship for newer opportunities within the group.”
Pharma and real estate conglomerate Piramal Group is also expected to sell its 8.3% stake in the shadow lender soon. Promoters own a 25.1% stake in the Chennai-based company, according to NSE data.
Analysts are positive on the company’s prospects due to its strong earnings, attractive valuations and management structure.
“It is not the promoter who is selling the stake in Shriram Finance. Somebody is selling a stake because they have a need. Why should we attach too much importance to the stake sale,” the head of research at a Mumbai-based brokerage said. “This is the most attractive stock in the NBFC space. They know the market in comparison to any new entrant.”
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Shriram Finance became the largest non-banking financial company in 2022 following the merger of Shriram City Union Finance and Shriram Transport Finance. Its assets under management stood at nearly Rs 1.9 trillion as on March 31.