Piramal Enterprises to merge with subsidiary
MUMBAI : After the Aditya Birla group, it’s now Piramal’s turn. Piramal Enterprises Ltd on Wednesday decided to merge with its unlisted subsidiary Piramal Capital & Housing Finance Ltd, becoming the second financial institution to embrace a structure that spares a mandatory public share sale by the unlisted arm. The merger, effective 1 April, 2024, is expected to be completed in nine to 12 months.
Piramal Enterprises investors will get one share of Piramal Capital for each held in company. The merged company will be named Piramal Finance. In a stock exchange filing, Piramal Enterprises said its board has cleared the plan, which requires approval of banking and market regulators, shareholders and creditors, as well as National Company Law Tribunal and stock exchanges.
“Piramal Capital is an upper layer NBFC and is mandated to list by September 2025. By pursuing a merger, the resultant listed entity will meet that requirement. Other reasons for pursuing a merger are that having two lending entities introduces operational inefficiencies.
We think it’s a cleaner structure from a governance perspective and ongoing operating inefficiency to have one entity. Our business model is a multi-product retail, which means a pure housing finance licence can end up being restrictive," Jairam Sridharan, managing director, Piramal Enterprises, said in the exchange filing. Also Read: Piramal Enterprises to stay away from future investment in AIFs The Reserve Bank of India classifies NBFCs in four layers based on size, activity and perceived risks.
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