Bandhan Bank, Gruh Finance shares plunge up to 6% amid media reports of likely merger

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Published: January 7, 2019 4:59 PM

Even as the media buzz around Bandhan Bank and Gruh Finance gets stronger, shares of the private sector lender and home finance firm plunged in trade on Monday. We take a closer look.

The merger between the two is reportedly being done via a share swap, and the move is aimed at cutting the bank’s promoter stake, and also expand housing finance portfolio.

Even as the media buzz around Bandhan Bank and Gruh Finance gets stronger, shares of the private sector lender and home finance firm plunged in trade on Monday. Bandhan Bank share price cracked more than 6.3% to end at Rs 495.55, while Gruh Finance shares ended the session at Rs 305. The merger between the two is reportedly being done via a share swap, and the move is aimed at cutting the bank’s promoter stake, and also expand housing finance portfolio.

“It will be a positive in the slightly long run. In the short run, we know Bandhan Bank has a problem of getting their shareholding patterns into order but Gruh Finance is a very key NBFC to acquire. So it will turn out to be a very good marriage and it may have very good repercussions in the longer term,”  Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, IIFL Securities said in an interview to ET Now.

Also read: Essar Steel’s parent Essar Global repays Rs 6,300 crore loans to ICICI, Axis, Stan Chart banks

The current rules require Bandhan Financial Holdings to cut its stake to 40% from 82.3% within three years of starting business. In September 2018, it had placed restrictions on the bank for failing to meet these rules by freezing branch expansion and Ghosh’s remuneration.

According to Bhasin, these NBFCs could be huge wealth creators. “We saw that in the case of Bharat Finance with IndusInd, then IDFC Bank and this will work out to be a very big positive. Let us not look at the next three days or three months, but in next three years, these could be huge wealth creators,” he told the channel.

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