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Shriram Capital, Shriram City to merge

News: Shriram Capital (SCL) and Shriram City Union Finance (SCUF) will merge with Shriram Transport Finance Company (STFC) as part of the restructuring in the Shriram Group. After the merger, the entity will have assets under management (AUM) of over | 1.5 lakh crore, more than 2.0 crore consumers and a distribution network of around 3,500. The merger, which will lead to a simplified corporate structure, is expected to pave the way for the exit of investors like Ajay Piramal. Piramal, who holds 20% in SCL and 9.96% in SCUF, will hold 8.37% in the merged entity, according to Business Standard.

Views: We believe this is a positive development. The merged entity would be among the largest retail finance NBFCs in the country. The merger would also help the group bring together all its lending products – commercial vehicles, two-wheeler loans, gold loan, personal loan, auto loan and small enterprise finance - under a single roof, thereby creating a financial powerhouse.

Impact: Positive.