South African financial services group Sanlam is picking up a 23% stake in Shriram Asset Management Company Ltd and has made an open offer to buy more shares from public shareholders, deepening its relationship with the Shriram Group.
Mumbai-listed Shriram Asset said in a stock-exchange filing it will issue shares equivalent to a 23% stake to Sanlam for Rs 105 crore. The company will issue the shares on a preferential basis at a price of Rs 270 apiece, less than half its current price of Rs 628.50.
Sanlam will be classified as a promoter of Shriram Asset after the transaction.
The transaction has triggered a mandatory open offer that involves both Sanlam and the company’s existing promoter, Shriram Credit Company Ltd, acquiring a stake of up to 26% from public shareholders.
Currently, Shriram Credit holds a 62.6% stake in the asset management company. If the open offer is fully successful, the collective stake of the two promoters will rise to 97.2%. Considering that Shriram AMC is a listed company, promoters must, within the prescribed timeline, make sure that the public shareholding does not fall below 25%.
The open offer provides an exit window to US-based Mission Investments, which had picked up a 23% stake in the asset manager two years ago for about Rs 37 crore.
Shriram AMC is part of the Shriram Group and operates its mutual funds business. The group also operates non-banking finance, life and general insurance, and stock broking businesses. Currently, the AMC’s assets under management stand around Rs 870 crore.
Meanwhile, Sanlam’s investment increases its exposure to Shriram Group. In April, the South African firm increased its stakes in Shriram General Insurance Co and Shriram Life Insurance Co (SLIC). As a result, Sanlam’s effective economic shareholding in SGIC increased from 40% to 51% and the effective economic shareholding in SLIC rose from 42% to 54%. Sanlam also owns a minority stake in Mumbai-listed Shriram Finance Ltd.
