KKR, in preparation to buy a 10% stake in Sriram Capital, could have a deal worth around Rs 2,000 crore

Sriram Capital will sell its stake in the insurance business before investing, a senior official has confirmed

SRIRAM CAPITAL: Ongoing negotiations between global investment firm KKR to buy about 10 per cent stake in Indian company SRIRAM General Insurance have reached an advanced stage. A senior executive told Moneycontrol that KKR could buy shares of Sriram Capital for Rs 1,800-2,000 crore. Sriram Capital is the holding company of the Chennai-based Sriram Group, which is undergoing a major transformation.

S Natarajan, a senior member of Sriram Group, said the shares would be sold before the insurance business demerges or demerges from Sriram Capital. Sriram Capital will get money in this series. Moneycontrol has contacted KKR about this and will update the story if it receives a response.

Plan for restructuring

The group is simplifying its entire structure. Sriram Capital is in the process of merging its insurance and other businesses into a separate company. The rest of the financial backlog will then be merged with its two listed companies – Sriram Transport Finance and the merged part of Sriram City Union Finance.

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Such is the ownership structure of the company

Till now, the general insurance business was owned by Sriram Capital (formerly known as Financial Holdings Pvt Ltd) which has 19,85,95,747 shares, which is 76.63 per cent of the paid up capital of the company. Sunlam Emerging Markets has 22.92 per cent stake in paid-up capital. According to the company’s latest annual report, the total public holding is 0.45 percent. KKR will sell a stake in Sriram Capital.

Sriram Capital owns shares in several companies. Sriram Ownership Trust (SOT), which owns 29.7 per cent stake, will emerge as the holding company for the group’s financial services business. Also, TPG 9.4 per cent, Shrivel Trust 13.2 per cent, Piramal 20 per cent and Sanlam 26 per cent.

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The situation is changing

The company said in its annual report that the general insurance industry was struggling to make a profit. According to the annual report, “Non-life insurance grew by more than 6 per cent in 2020-21. The industry’s gross return premium (GWP) was Rs 1,98,736.21 crore for the year ended March 31, 2021, compared to Rs 1,86,712.58 crore in the year-ago period. But for the industry, profits are not coming with GWP growth. High competition and high infrastructural costs are the biggest barriers to profits. “

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