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* Merged entity to be market leader in all businesses it operates in - #1 Commercial Vehicle Financier, #1 MSME lender in the underbanked customer segment and #1 Two Wheeler financier.

* Comprehensive product suite, wider distribution network and increased customer touch points to prove beneficial to customers of both organizations. 

* Compelling synergies to enhance shareholder value. Potential to increase new business margins through product mix optimisation and cross sell leading to better operating leverage.

* Shriram Capital Limited, the Promoter entity of the group will also merge with Shriram Transport, post de-merger of all other businesses of the group – namely – Life insurance / General Insurance and all non-lending and non-insurance activities

* One Composite Scheme for all above

* Name of the merged entity to be “Shriram Finance Limited”

Mumbai, December 13, 2021: Shriram Transport Finance Limited (STFC), India’s largest Commercial Vehicle Financier and Shriram City Union Finance Ltd. (SCUF), India’s premier diversified NBFC in the underserved segment and their Promoter entity Shriram Capital Limited (SCL) announced that the boards of directors of STFC, SCUF & SCL, at their respective board meetings held on 13th December 2021, approved the merger of SCL & SCUF with STFC.

The merger is subject to the approval of shareholders of SCL, SCUF and STFC respectively, regulatory approvals of RBI, CCI, IRDA, NHB, NCLT and such other regulatory approvals as may be required.

Pursuant to the merger, Shriram Transport will issue,

- 1.55 shares for every 1 share of SCUF

- 0.09783305 share for every 1 share of SCL

* this translates into SCL shareholders getting 1 share of STFC for every 1 share held by SCL in STFC and

* SCL shareholders will get 1.55 STFC shares for every 1 share of SCUF held by SCL

Strategic Rationale for 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.

Commenting on the merger, Mr. DV Ravi, MD Shriram Capital said, “ 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.”

Ajay Piramal, Chairman, PEL while endorsing the merger, added, “I am pleased to see the coming together of both lending businesses of Shriram. While they emerge as the largest retail finance NBFC, it also opens up immense opportunities for them with the synergies that transpire. It will be an exciting journey for the group as it creates the appropriate value proposition for the combined customer base of over 2 crores.”

Mr. Umesh Revankar, Vice Chairman and MD, Shriram Transport Finance Limited said: “We are thrilled about the unique opportunities this merger will create for our customers, as well as our employees and business partners. Shriram Finance will undoubtedly become the market leader for financial services in rural India”

Mr. Y S Chakravarti, Managing Director and CEO of Shriram City Union Finance Limited expressed his confidence that the group will stay firm on its business model and said, “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.”

Management Team

The leadership team at Shriram Finance would leverage the immense pool of talent available across both the organisations.

Mr. Umesh Revankar, the Executive Vice Chairman and CEO of STFC, would be the Vice Chairman of the merged entity.

Mr. Y.S. Chakravarti, the MD & CEO of Shriram City, would be the MD & CEO of the merged entity.

The respective boards today approved the appointment of Mr.Umesh Revankar on the SCUF board and that of Mr.Y S Chakravarti on the STFC board of directors.

The board of STFC also approved the appointment of Mr.Parag Sharma the CFO of the company as a Whole Time Director in the board.

Advisors to the transaction

Morgan Stanley and ICICI Securities have acted as Financial Advisors for this transaction. The valuation exercise has been conducted by Bansi C Mehta & Co. and Ernst and Young (EY). EY has also assisted in the restructuring and taxation assessment for the transaction.

J&M Legal has been legal advisor. HSBC and JM Financial have helped with the Fairness opinion.

PWC will help Shriram Transport and Shriram City Union Finance navigate through the post-merger integration process.

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