The board of directors of the Piramal Enterprises has approved its merger with wholly owned subsidiary Piramal Capital & Housing Finance (PCHFL), which will now be rechristened Piramal Finance.
As a part of the merger consideration, for every share of Piramal Enterprises, shareholders will receive one equity share of PFL and subject to RBI’s approval, one NCRPS (non-convertible non-cumulative nonparticipating redeemable preference share) of Rs 67 of PFL.
It has been anticipated that the entire process will take 9-12 months to be completed.
The primary objectives for the consolidation is so that the group structure is simplified and shareholders can have direct access to the entire lending business, the company said.
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,” Piramal Enterprises, said in the exchange filing.
“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,” he added.
The company said, PCHFL, by virtue of its current diversified lending profile, has not been able to fulfill the above PBC requirement. Therefore, it is in process of submitting an application to the RBI for conversion of its HFC license to an NBFC-ICC license.
Notably, the NBFC-ICC is any company with its principal business in asset finance, providing loans and the acquisition of securities, according to the RBI.
