TPG to invest $120m in Indian consumer finance company

The global buyout firm is to acquire a 26.7 percent stake in Shriram City Union Finance, its second investment in the Shriram Group in two years. The investment will be made from its recently closed $4bn Asian fund.

TPG will acquire a 49 percent stake in Shriram Retail Holdings, the holding company of Shriram City Union Finance, a listed consumer lending company, for up to $120 million (€84.4 million). The investment is subject to regulatory approvals.

TPG's stake in Shriram Retail Holdings will translate into a 26.7 percent stake in Shriram City Union Finance post-transaction, excluding shares that it may acquire in the open offer for shares that the company is required to make.

Established in 1986, Shriram City Union Finance was converted into a listed company in 1998 with its shares being listed on the Bombay Stock Exchange, Madras Stock Exchange and National Stock Exchange. The company began operations as a transport finance company, but it now provides financing of consumer durables, automobiles, tractors, personal loans and enterprise funding as well.

The investment was made from TPG Asia V, which closed on roughly about $4 billion. The fund makes investments in Greater China, India, Japan, Australia and Southeast Asia. Merrill Lynch and J Sagar Associates advised TPG and the Shriram Group was advised by Kanga & Co.

This is TPG’s second investment in the Shriram Group in two years. In 2006, Newbridge Capital, an Asia-focused private equity firm established in 1994 by TPG and Blum Capital, invested about $100 million to acquire a stake in its subsidiary Shriram Transport Finance Company. That same year, as TPG expanded in Asia, it absorbed Newbridge and devolved its partnership with Blum.

The firm recently closed TPG Partners VI, a $19.8 billion buyout fund, market sources told PEO earlier this month. It has also held a final close on its distressed credit and financial services fund on approximately $6 billion. Including its Asian fund, TPG has raised about $30 billion so far this year.

TPG did not respond to requests for comment by press time.