The Shriram Group is planning to list its general insurance arm first, while both the insurance companies will go public within two years.
“Both general and life insurance arms, we will be looking at listing maybe in a year or two from now,” said Umesh Revankar, executive vice chairman, Shriram Finance, on Tuesday. The two insurance arms are Shriram General Insurance and Shriram Life Insurance.
He said that once the two companies attain a certain scale, they will go public. “Both are doing very well; they have been profit-making since inception. We have not added any capital to either of the companies,” Revankar told reporters during an event.
Shriram Group and South African financial services giant Sanlam jointly own Shriram Life Insurance and Shriram General Insurance. Recently, the Sanlam Group bought out the stake held by private equity major TPG in both the general and life insurance entities. TPG held 6.29 per cent in Shriram General Insurance and 7.04 per cent in Shriram Life.
Additionally, Revankar highlighted that currently, Shriram Finance, the diversified non-bank finance company (NBFC) of the group, does not have any plans to tap the overseas bond market for funds as they are quite comfortable raising money from the domestic capital markets. However, they may weigh their options on overseas borrowing once the Federal Reserve cuts rates.
Shriram Finance has indicated that it will raise around $1 billion from overseas in the current financial year (FY25). The borrowing would be through a combination of bonds, loans, and asset-backed securities (ABS) transactions.
“$750 million is the threshold that we can borrow, so we will first exhaust that limit and then we will see. It can be both bonds and loans. We see good opportunities in loans. We also have the ABS market. All the options are available to us, but we are not in a hurry,” Revankar said.
“Domestic liquidity is looking good for us. We are quite comfortable,” he added.
Revankar also underscored that they are looking to utilise their distribution strength to make their asset management company (AMC) business much larger than what it is now. “In the next 3-5 years, we would like to make it larger. Shriram Finance has 3,000 branches, plus we have deposit agents and insurance agents. We are yet to utilise our distribution strength to scale the business, but in the next 3-5 years, we have a strategy to make this business pretty large,” he said.
Revankar, who is the chairman of the Finance Industry Development Council (FIDC) – an industry body for NBFCs, said that FIDC is working on securing recognition as a self-regulatory organisation (SRO) in the NBFC sector from the Reserve Bank of India (RBI). FIDC had earlier indicated that it would apply for an SRO licence.
In June, the regulator invited applications from entities to become SROs in the NBFC space. RBI said a maximum of two such entities will get approval for the sector.
Revankar also said their asset reconstruction company (ARC) will focus only on acquiring retail assets. “We would like to buy retail portfolios from other banks and NBFCs, but we will be very gradual. We will not rush to build scale there,” he added.
First Published: Sep 10 2024 | 7:24 PM IST