Shares of IDFC and Shriram Group of companies fell by up to 7.4 per cent today after they agreed to merge and create the largest retail-focused bank in the country.
IDFC's scrip went down by 4.67 per cent to Rs 57.10 on BSE. IDFC Bank also fell by 3.32 per cent to Rs 62.60, but later recovered the losses and was trading 0.31 per cent higher at Rs 64.95.
Shares of Shriram Transport Finance tanked 7.39 per cent to Rs 1,010 and Shriram City Union Finance tumbled 5.52 per cent to Rs 2,350.
IDFC, which entered into banking 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 said.
Currently, Shriram Group has a loan book of over Rs 80,000 crore, while IDFC and its banking arm together have loan book of over Rs 60,000 crore. The total assets of the merged entity will cross Rs 9 trillion.
IDFC owns 52.86 per cent in IDFC Bank, which is the seventh-largest private lender in the country now. Piramal owns 20 per cent in Shriram Capital and 10 per cent each in both Shriram Transport and Shriram City Union.
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