Shriram Capital, the holding company for the financial services in the Shriram Group will invest Rs 300 crore to start a new business aggregating retail bad loans as it seek to leverage its collection efficiencies, company executives said.
The company will also expand it asset management business by building a wealth management as it seeks to deepen relationships with its depositors.
Shriram has already applied for a RBI license to start an asset reconstruction company (ARC) and expects an okay from the regulator before the end of the fiscal.
Umesh Revankar, director at Shriram Capital said the company wants to target small retail loans of ticket size less than Rs 20 lakhs for its new venture.
“If you really see the small NPAs of this size are not the focus of existing ARCs. We have a 50 year old history of lending and recovery. We know the nuances of collecting money. Our primary job is collection rather than lending so this business can be a new avenue for us,” Revankar said.
The new venture will be 100% owned by Shriram Capital, the holding company for the financial services businesses of the group.
The company plans to train people and is building a team for this new business, he said.
Separately, the company is also rekindling its wealth management business to complement its listed mutual fund which received Rs 35 crore from Mission1 Investments LLC valuing the company at Rs 150 crore in February this year.
Mission1, controlled by investors Gaurav Patankar, Amit Rajpal and Eric Wetlaufer will own 23% stake in the company post converting the compulsorily convertible debentures (CCDs) and warrants the company had said in February.
Even for its wealth management business the company is looking for investable funds of Rs 25 lakhs to Rs 50 lakhs. DV Ravi, vice chairman at Shriram Capital said rekindling the company’s wealth management and mutual fund business will allow the company deepen its relationship with customers both on the asset as well as liability side.
“We have a fairly large retail liability franchise and then we have other customers like borrowers for two wheeler loans and SME borrowers. All these can be tapped for the weath management business,” Ravi said.
Shriram Group has a deposit base of about Rs 38,000 crore and around five lakh depositors whom it expects to tap for its mutual fund and wealth management business.
Wealth, mutual fund and broking business is held by Shriram Credit an holding company NBFC subsidiary of Shriram Capital.
On Tueaday, the group’s general insurance company Shriram General insurance said it earned net profit of Rs 217 crore in the first half of the current fiscal up 47% year on year.
Shriram owns 67% in the general insurance venture while South Africa’s Sanlam Group owns 23% and private equity KKR 10%.
