Shriram Transport Fin to raise Rs 600 cr through pref issue

Shriram Transport Finance, (STFC), the largest asset financing NBFC in the country, said it would be raise Rs 600 crore ($150 million) through preferential allotment of equity shares at premium to New York-based hedge funds and a JM Finance group company, besides issuing optionally convertible warrants to Shriram Holdings to retain promoters’ stake.

After getting the approval of shareholders at the EGM on December 12, STFC is hopeful of raising the funds by December.

This will be one of the largest fund raising moves by the NBFC to support its ambitious growth plans.

The committee of the board, which met on Tuesday, approved the allotment of 68 lakh equity shares to Blue Ridge partnership and\or its affiliates, 40 lakh equity shares to Tiger global management LLC and\or its affiliates, both NY-based hedge funds and 12 lakh shares to Kampani Finance, a JM Finance group company.

All the 1.20 crore equity shares of Rs 10 each would be allotted at a price of Rs 300 per share ( Rs 285 current price) totalling Rs 360 crore. The balance Rs 240 crore is to be raised by issuing 80 lakh warrants to the closely held Shriram Holdings (Madras) at a price of Rs 30 per warrant with an option to the holder to subscribe to one equity share per warrant at a price of Rs 300 per share.

In a statement, STFC said investment in the first round would be Rs 384 crore (Rs 360 crore plus 10% of Rs 240 crore by Shriram Holdings). This would go up by another Rs 216 crore if the option is exercised within 18 months by Shriram Holdings.

The issue of two crore new shares will raise the paid-up capital of STFC by Rs 20 crore to Rs 211 crore. In the current Rs 191-crore capital, promoters through Shriram Holdings hold 44.67%. In turn, the promoters hold 51% in Shriram Holdings and the balance 49% is held by TPG Newbridge, which had invested $100 million in the arm in 2006.

As the warrants are aimed at restoring the promoters’ stake in the expanded capital, TPG Newbridge is expected to pump in another Rs 120 crore into the holdings arm. ChrysCapital is the single-largest investor in STFC with 19% and its stake will get diluted, post-current issue.