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IDFC, Shriram Group slip over 7% on proposed merger

LiveMint logoLiveMint 10-07-2017 PTI

New Delhi: Shares of IDFC Ltd and Shriram Group of companies fell by up to 7.4% after they agreed to merge and create the largest retail-focused bank in the country.

IDFC’s scrip went down by 4.67% to Rs57.10 on BSE. IDFC Bank Ltd also fell by 3.32% to Rs62.60, but later recovered the losses and was trading 0.3% higher at Rs64.95. Shares of Shriram Transport Finance Co. Ltd tanked 7.39% to Rs1,010 and Shriram City Union Finance Ltd tumbled 5.52% to Rs2,350.

IDFC, which entered into banking in late 2015, and the Piramal Group-backed financial services major Shriram Group on Saturday agreed to merge. “The boards of Shriram Group and IDFC have entered into an exclusivity arrangement for 90 days to jointly explore an opportunity for a merger. No transaction has been approved by the boards.

“Now, diligence will take place, we will discuss on the valuations and the respective boards will then meet and then a proposal will be made. If more time is needed then will extend the exclusivity period by another 60 or even 90 days,” Ajay Piramal, chairman, Shriram Capital Ltd said.

Currently, Shriram Group has a loan book of over Rs80,000 crore, while IDFC and its banking arm together have loan book of over Rs60,000 crore. The total assets of the merged entity will cross Rs9 trillion.

IDFC owns 52.86% in IDFC Bank, which is the seventh-largest private lender in the country now. Piramal owns 20% in Shriram Capital and 10% each in both Shriram Transport and Shriram City Union.

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