Strange bedfellows

The IDFC-Shriram deal is unlikely to create value for its stakeholders

On July 8, IDFC Bank and the Shriram group announced that they have entered into an exclusive arrangement for 90 days to explore the possibility of a merger.  As per the proposed arrangement, Shriram City Union Finance (SCUF) will be merged with IDFC bank, while Shriram Transport Finance Company (STFC) will become a subsidiary of IDFC and will be subsequently delisted. The other businesses (life and general insurance, AMC, stock broking) will also become subsidiaries of IDFC.

The proposed deal got a thumbs-down from the market with STFC and SCUF declining 7.57% and 8.48% and IDFC Bank losing 4.87% (as on July 2017), since the deal was announced.

The merger will give IDFC Bank, which has been struggling to grow its retail


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