IDFC, which was set up in 1997 to meet the funding requirement for the infrastructure sector, and the Chennai-based Shriram Group, a provider of financial services like loans to small and medium entrepreneurs, are considering options to merge their businesses to create a larger entity worth around $10 billion.
According to a news report, the entire lending business of the Shriram Group, which includes two listed companies Shriram Transport Finance and Shriram City Union Finance, will be merged with IDFC Bank, in which IDFC holds a 52.86% stake.
The unlisted life and general insurance business of the group would be merged with IDFC. An announcement is likely to be made on July 8.
IDFC and Shriram are said to have exclusivity of 90-120 days for merger talks. The IDFC Bank scrip closed 1.69% higher at Rs 63.35 after touching an intra-day high of 3.85%, while Shriram Transport shares ended up 1.21% at Rs 1,107.90, after rising as much as 3.8% during the session. Shares of Shriram City Union closed 1.01% lower at Rs 2,519.95 after rising 4.02% during the day.
IDFC Bank said, “We keep evaluating opportunities from time to time and should anything concrete fructify, we will inform the exchanges as appropriate. At this point, there is nothing that can be disclosed.”
“Under the circumstances, we are unable to confirm or deny the news reports. Meanwhile, we cannot comment on market speculations,” the bank added.