Premji Invest, the private equity investment fund of Wipro Chairman Azim Premji, will buy 2.2 percent stake in Aditya Birla Capital Ltd. after it completes an internal restructuring.
Aditya Birla Capital will issue 4.8 crore preferential shares at Rs 145.4 a piece to PI Opportunities Fund, an affiliate of Premji Invest, according to a stock exchange filing. The stake in Aditya Birla Capital will cost Premji's fund around Rs 700 crore.
The deal will come to fruition only after the planned merger of Aditya Birla Nuvo Ltd. and Grasim Industries Ltd. is completed, and the financial services business of Grasim is hived off into Aditya Birla Capital. The restructuring will come into effect from July 4, the statement said. Aditya Birla Capital will be listed prior to the restructuring and pending approvals.
Brokerage Calls
The deal values the financial services business of the Aditya Birla Group at Rs 32,000 crore, according to a separate media statement by Aditya Birla Capital. Brokerage houses Morgan Stanley and Motilal Oswal expects the new valuation to auger well for Grasim Industries Ltd., which currently houses the financial arm. Both the brokerage houses had valued the division at a lower value.
Aditya Birla Capital, which was earlier Aditya Birla Financial Services, had assets under management worth Rs 2.46 lakh crore as of March 2017.
Read: Five Things You Need To Know About The Aditya Birla Nuvo-Grasim Merger
Group chairman Kumar Mangalam Birla welcomed the "marquee" investment by Premji, saying that the transaction justifies the strength of Aditya Birla's financial services business. A spokesperson for Premji Invest said in another statement that Aditya Birla Capital's "profitable and scalable business model" will create value for stakeholders.
Azim Premji has a personal net worth of around $14.3 billion, of which Premji Invest manages about $1 billion, according to the Bloomberg Billionaires Index.
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