
Why is Shriram Transport looking to aggressively raise funds in the market?



Shriram Transport Finance will raise Rs.4000 crore via a qualified institutional placement (QIP) to augment liquidity. Details of the fund raising are awaited. Timing may be critical as most corporates are wary of approaching the markets at the current juncture. The QIP is most likely to be done through a fresh issuance of equity shares. The capital is meant to preserve liquidity in hand. Currently, the Piramal Group owns 20% in Shriram Capital, which in turn holds 26.23% in STFC. Recently, CRISIL had raised questions over STFC’s collections and asset quality metrics in the current environment. The borrowers of STFC are primarily individual small road transport operators whose truck utilisation and income streams are vulnerable to weak economic activity. Apart from this equity issuance, STFC will also look to raise up to Rs.35,000 crore via bond issuances