Shriram Capital has entered into a 90-day talk to explore the possibility of a merger with IDFC bank, reported PTI on Saturday afternoon. The decision was taken after a meeting between the boards of IDFC Bank and Shriram Capital where they agreed to merge but no transaction was finalised between the two parties. The mega-merger between the two countries is expected to be valued at over Rs 65,000 crore. Addressing the media here this evening after the boards of both the companies met earlier in the day, Shriram Capital chairman Ajay Piramal said, “The managements have been given 90 days to explore the merger and that share swap ratio will be decided after this.”
“Merger to form one of the largest retail focused banks; IDFC Bank, Shriram have 90 days to explore merger, get regulatory nods,” Ajay Piramal was quoted saying by the agency. The report added that all the other operating companies of Shriram Group will also merge into the bank and create a Rs 20,000-crore retail bank. However, IDFC’s Rajiv Lall clarified that Shriram Transport Capital will remain a separate entity post merger.
This deal is likely to benefit both the companies. It will provide IDFC the much-needed branch presence to its 1,000 branches while Shriram will get more wholesale assets, the companies said. Lending business of Shriram Capital includes listed firms Shriram Transport Finance and Shriram City Union Finance, while the unlisted life and general insurance businesses of the group may get merged with IDFC, which owns 52.86 per cent stake in IDFC Bank.
IDFC Bank was launched in late 2015 in the latest round of bank licences and took over all its parent IDFC Ltd’s infra assets. Meanwhile, Shriram Transport Finance is the largest financer of the commercial vehicles in the country. Piramal Enterprises own 20 percent stake in Shriram Capital and 10 per cent each in Shriram Transport and Shrithe Shriram City Union.