Shriram Group Merger: 1.55 STFC share for every SCUF share

Shriram Group today said its latest decision to bring together different units under one company will help it realize synergies and benefit each of its businesses.

The merged entity will be able to offer a “comprehensive product suite, wider distribution network and increased customer touch points to prove beneficial to customers of both organizations,” the companies said, adding the move also offers “compelling synergies to enhance shareholder value” and “potential to increase new business margins through product mix optimisation and cross sell leading to better operating leverage.”

As a part of the merger, Shriram Transport will issue 1.55 shares for every 1 share of Shriram City Union Finance, 0.09783305 share for every I share of Shriram Capital Ltd.

As a result, SCL shareholders will end up getting 1 share of the merged company for every 1 share held by SCL in STFC and 1.55 STFC shares for every 1 share of SCUF held by SCL.

YS Chakravarti, the MD & CEO of Shriram City, would be the MD & CEO of the merged entity, while Urnesh Revankar, the Executive Vice Chairman and CEO of STFC, would be the Vice Chairman of the merged entity.

The company released the following statement to explain the rationale behind the merger:

“The merger would help the group bring together all its lending products – Commercial vehicles, Two-Wheeler Loans, Gold Loan, Personal Loan, Auto Loan & Small Enterprise Finance -under a single roof, thereby creating a financial powerhouse which would end up being a market leader in all the product and consumer segments that it operates in.
SCUF and STFC see this merger as an immense opportunity to strengthen their consumer offerings and provide a more holistic product basket encompassing all lending products,

“The intent is also to create a comprehensive cross-sell program combining Insurance, broking & AMC businesses, including their Depositors, backed by a state of the art technology platform. SCUF brings with it an enviable granular product suite with an AUM of 35000 Cr and a distribution network of over 950 branches.

“Post merger with STFC, the merged entity would have a combined AUM of over Rs 1,50,000 Cr, over 2 Crore customers served till date and a distribution network of over 3500. All of these would be serviced by a team of over 50,000 employees.

“All customers of SCUF and STFC will, post-merger, be able to access all the products of the merged entities through the vast network of 3500+ branches and sales points of STFC and SCUF. Similar technology architecture in SCUF and STFC will ensure that the branches of the two companies will be interoperable for business of each other in a very short time.

“Significant leverage on data analytics and understanding of customer needs will enable the merged entity to meet all the financial needs of its 2 crore plus customers. The potential to enhance customer delight and at the same time deliver shareholder value through cross sell of products and services is immense.

“With this stronger and larger customer franchise, there would also be a significant shift in company’s pace of innovation. Shriram Finance will enhance its product basket with new products catering to a larger universe of both Retail & SME customers.

“There has always been a strong focus on technology across the group and the merger will further enable the tech efforts to come under one umbrella which will help efficient use of data and analytics and service our customers better. With a significant customer base, the focus would now shift to create Digital lending products for a click-n-use intent.

“The company intends to soon launch a Super-App where all its existing and new lending products would be offered under the Shriram Finance umbrella. This would help the customer access the entire Shriram ecosystem at a single click and result in a seamless customer experience. The company intends to gather more insights and analytics through this and continue on its path of innovation for future.”

“The merger will enhance our distribution footprint across all business lines without incurring any incremental capex. The benefits likely to accrue due to synergy benefits and the digital initiatives are immense. This merger will also simplify our holding structure eliminating multiple layers.

“The Shriram Group has always kept the credit starved segment of customers at the heart of all our products and innovation and we believe this merger is another step towards simplifying and offering our customers solutions to all their financial needs under one umbrella. Being the No.1 in the NBFC space brings with it a tremendous responsibility and we are confident that we will come good on it.”