Infra lender IDFC which entered into banking late 2015 and the Piramal Group-backed financial services major Shriram Group on Saturday agreed to merge and create the largest retail-focused bank in the country.
The boards of two groups met here on Saturday and at an evening press announcement, addressed by Ajay Piramal of Piramal Enterprises, R Thyagarajan of Shriram Group and Rajiv lall of IDFC Bank, said the managements have been given 90-day period to complete due diligence and explore merger, and if all goes well, within 12 months a formal merger will take place.
“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,” Piramal said.
The proposal is subject to approvals from the RBI, Sebi, Irdai, CCI and stock exchanges, Piramal and lall said. “Our ambition, hope and intent is to together make the country's largest mass retail banking franchise with a universal bank at its core,” lall said.
Piramal said: “It is really a chance to create a financial conglomerate with a universal bank at the centre that we believe will become the country's largest mass retail universal bank.” They did not say what could be the name of the merged entity, but added that the brand Shriram will be retained while almost all key businesses of the Shriram Group will be merged with either IDFC Bank or IDFC.
However, later, to a journalist's question, Piramal said since IDFC already has a banking licence, they will go with the name IDFC and not Shriram. Currently, Shriram Group has a loan book of over Rs 80,000 crore while IDFC and its banking arm IDFC Bank together have loan book of over Rs 60,000 crore. The total assets of the merged entity will cross Rs 9 trillion.