Sundram Fasteners’s chairman’s daughter to trim holding co stake
MUMBAI: Sundram Fasteners‘s chairman Suresh Krishna’s eldest daughter, Preethi Krishna, is planning to sell a part of her stake in the holding company of the auto components maker. The move by US-based Preethi (59), a fourth-gen member of the storied TV Sundram Iyengar clan, is being seen as a step towards exiting the family business.
Preethi’s share will be bought by her father, mother Usha Krishna, and two sisters – Arathi Krishna and Arundathi Krishna – consolidating their interests in the holding company: TVS Sundram Fasteners.To finance the transaction, the four will sell Sundram Fasteners shares worth Rs 400 crore to institutional investors like West Asian funds.
Once the share-purchase transaction is concluded, Preethi’s stake in the holding company will fall to 14-15% from 20%. Suresh, Usha, Arathi and Arundathi too currently own 20% each in the holding company, which in turn holds 48% of Sundram Fasteners, which has a market value of Rs 28,000 crore.
Sources said the four family members through TVS Sundram Fasteners will sell 1.5% stake of Sundram Fasteners via a block deal to foreign investors for Rs 400 crore. The share-sale is to finance another transaction between them and Preethi at TVS Sundram Fasteners, they added. The quartet will buy a part of Preethi’s stake in the holding company as she wants to reduce her interest in the unit.
Though Preethi is a director of Sundram Fasteners, she doesn’t play an active role in the operations of the Chennai-based company as compared to her two sisters. Arathi (55) is the MD of Sundram Fasteners while Arundathi (50) is the joint MD.
Preethi is settled in the US and her 20% stake in TVS Sundram Fasteners is held through a trust, which is controlled by her husband, Ram Sundaram, a former Goldman Sachs honcho. Emails sent to Ram Sundaram and Suresh Krishna didn’t elicit any reply.
At one point in time, Sundram Fasteners was part of the undivided TVS Group. Now the south-based conglomerate’s diverse units are run by different family members as part of the business separation agreement between them. For instance, Suresh’s first cousin Venu Srinivasan controls TVS Motor and Sundaram Clayton.
In a common holding company, which in turn holds a listed entity, the exit of a particular family member becomes tricky as it cannot happen without the consent of all the other shareholders of the holding company. This imposes liquidity concerns for the seller-shareholder, said a lawyer. However, the upside is that the entire shareholding is consolidated in the holding company and therefore, voting rights with respect to the listed entity can be exercised by one common shareholder i.e. the holding company, he said.
Preethi’s share will be bought by her father, mother Usha Krishna, and two sisters – Arathi Krishna and Arundathi Krishna – consolidating their interests in the holding company: TVS Sundram Fasteners.To finance the transaction, the four will sell Sundram Fasteners shares worth Rs 400 crore to institutional investors like West Asian funds.
Once the share-purchase transaction is concluded, Preethi’s stake in the holding company will fall to 14-15% from 20%. Suresh, Usha, Arathi and Arundathi too currently own 20% each in the holding company, which in turn holds 48% of Sundram Fasteners, which has a market value of Rs 28,000 crore.
Sources said the four family members through TVS Sundram Fasteners will sell 1.5% stake of Sundram Fasteners via a block deal to foreign investors for Rs 400 crore. The share-sale is to finance another transaction between them and Preethi at TVS Sundram Fasteners, they added. The quartet will buy a part of Preethi’s stake in the holding company as she wants to reduce her interest in the unit.
Though Preethi is a director of Sundram Fasteners, she doesn’t play an active role in the operations of the Chennai-based company as compared to her two sisters. Arathi (55) is the MD of Sundram Fasteners while Arundathi (50) is the joint MD.
Preethi is settled in the US and her 20% stake in TVS Sundram Fasteners is held through a trust, which is controlled by her husband, Ram Sundaram, a former Goldman Sachs honcho. Emails sent to Ram Sundaram and Suresh Krishna didn’t elicit any reply.
At one point in time, Sundram Fasteners was part of the undivided TVS Group. Now the south-based conglomerate’s diverse units are run by different family members as part of the business separation agreement between them. For instance, Suresh’s first cousin Venu Srinivasan controls TVS Motor and Sundaram Clayton.
In a common holding company, which in turn holds a listed entity, the exit of a particular family member becomes tricky as it cannot happen without the consent of all the other shareholders of the holding company. This imposes liquidity concerns for the seller-shareholder, said a lawyer. However, the upside is that the entire shareholding is consolidated in the holding company and therefore, voting rights with respect to the listed entity can be exercised by one common shareholder i.e. the holding company, he said.
