Shriram Capital may rethink restructuring of lending and credit business

Shriram Capital may rethink restructuring of lending and credit business

Shriram Capital Private Limited (SCPL), the promoter of Shriram Finance Ltd (SFL), has indicated that it is evaluating restructuring options that could lead to a separation or reorganisation of its lending and credit business from its other business interests, according to a regulatory intimation.

The intimation from Shriram Capital was disclosed as part of the outcome of a board meeting update shared by Shriram Finance.

The company’s board of directors, at a meeting held on December 18, recorded its in-principle intent to explore and assess possible restructuring alternatives. SCPL clarified that the exercise is at a preliminary and exploratory stage and does not involve any final decision on structure, transaction, or timeline.

In its communication, SCPL emphasised that no commitment or approval has been granted by the board for any specific proposal. Any transaction, if eventually pursued, would be subject to detailed evaluation, definitive approvals, and compliance with applicable laws and regulations, including the Companies Act, 2013 and SEBI norms.

The promoter entity further said that the disclosure is being made purely for information and alignment purposes, given SCPL’s position as a promoter and shareholder of Shriram Finance.

It added that the intimation should not be construed as creating any obligation or expectation on Shriram Finance or its board.

SCPL said it would keep Shriram Finance appropriately informed if the proposed restructuring advances to a stage where formal engagement or action becomes necessary.

Separately, the disclosure also noted that Shriram Ownership Trust (SOT) is subject to non-compete and non-solicit obligations in relation to the company’s lending and credit business.

Subject to approval from public shareholders under the Listing Regulations, the investor will pay a one-time non-compete and non-solicit fee of $200 million to SOT as consideration for these restrictions, which will apply to SOT and its affiliates.

The payment is intended to prevent potential conflicts of interest between the company’s lending business and other financial services activities of SOT and its affiliates, and to safeguard the interests of all shareholders, including the investor.

The filing clarified that no such non-compete or non-solicit restrictions apply to Sanlam entities.