Shriram Group Eyes IPOs for Insurance Arms, $1 Billion Fundraise Plan

Shriram Group, a financial services company, plans to first list its general insurance division, followed by its life insurance arm, according to Umesh Revankar, the Executive Vice Chairman of Shriram Finance. 

The company’s two subsidiaries, Shriram General Insurance and Shriram Life Insurance, are expected to go public within the next 2 years as their businesses grow.

 “Both are doing well. They are profit-making from inception. We have not added any capital in both the companies,” Revankar told reporters during an event.

Shriram Group, along with South Africa’s Sanlam, jointly owns Shriram Life Insurance and Shriram General Insurance. Recently, Sanlam bought the stake previously held by private equity firm TPG in these 2 insurance companies. TPG owned 6.29% of Shriram General Insurance and 7.04% of Shriram Life Insurance.

Umesh Revankar, Executive Vice Chairman of Shriram Finance, mentioned that the company currently has no plans to raise funds from the overseas bond market, as they are comfortable sourcing funds from domestic markets. However, they may consider borrowing internationally if the U.S. Federal Reserve lowers interest rates. Shriram Finance is planning to raise about $1 billion from foreign markets this financial year.

Shriram Finance plans to raise funds through a mix of bonds, loans, and asset-backed securities (ABS) deals. Revankar mentioned they can borrow up to $750 million and will first use that limit. He said they see good opportunities in loans, bonds, and the ABS market but aren’t in a rush as domestic liquidity is strong.

Revankar also highlighted that Shriram Finance aims to expand its asset management business by leveraging its distribution network, which includes 3,000 branches, deposit agents, and insurance agents. Over the next 3-5 years, they have a strategy to grow this business significantly.

As Chairman of the Finance Industry Development Council (FIDC), Revankar noted that the industry body is applying to become a self-regulatory organization (SRO) for the NBFC sector, with the Reserve Bank of India planning to approve up to two SROs.

Regarding their asset reconstruction company, Revankar explained that it will focus on buying retail portfolios from banks and NBFCs, but they will proceed gradually without rushing to scale.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.