IDFC – Shriram group merger
1. Entered into 90day exclusivity to decide the possibility of merger.
2. Shriram transport will become 100% subsidiary of IDFC Ltd. SCUF ( Shriram City Union Finance) to be merged with IDFC Bank.
3. Life insurance and general insurance business of Shriram group to come under IDFC Ltd.
4. Reason for Shriram transport not being part of IDFC Bank is that it would have entailed huge equity dilution resulting IDFC Ltd holding in IDFC Bank coming below 40% (which current provision does not permit).
5. As per IDFC management Shriram group to complement the retail business of IDFC and provide the cross sell opportunity. The entire merger would require board and regulator’s approval which can take one year.
Our view: Do not see the merger to provide much boost to the weak liability and cross sell opportunity for the bank. Merger of Shriram transport with IDFC Ltd will attract holding company discount. For SCUF the swap ratio have to be much favorable as swap ratio based on current market cap, leads to eps dilution for IDFC Bank.
Some More About IDFC Bank
=>I am too Much Bullish on IDFC Bank from Starting after Demerge.
=>It has a Strong Management and Already Ready Made Client from IDFC Ltd..
=>Now It has to Grow its Business for Retail Customers and Add More Branches in Urban and Rural Area.
=> I personally Invested in this Stock after De-merge and add in every Decline till Rs.45 level and I except 10x Return in 5 Years and this Deal Defensively achieve my Target.
Declaimer: I am not SEBI Approved Adviser and I am not Here for give you any Advice , I make this Website only for New Investors and those Investors Who making Loss in Stock Market by Trading. I here by Share My Knowledge and Advice those Investors to Invest in Stock Market for Longterm Only.
If You Like Our Article then Subscribe to Rejems By Email.