IDFC-Shriram merger unlikely by early Oct

The chance sofa definite deal emerging from the merger talks between ID F Ca nd S hr ir am group by early October appeardim, asthe90-day window for negotiations draws to a close. Without committing on the outcome of the talks, AjayPiramal, chairman of S hr ir am Capital and Pi ram al Enterprises, said ,“We will explore ways to see if the merger works out on the basis of what the Reserve Bank of India approves, and what valuations are there. We are still looking into it .”

The chances of a definite deal emerging from the merger talks between the IDFC and Shriram group by early October appear dim, as the 90-day window for negotiations draws to a close.

Without committing on the outcome of the talks, Ajay Piramal, chairman of Shriram Capital and Piramal Enterprises, said, “We will explore ways to see if the merger works out on the basis of what the RBI (Reserve Bank of India) approves, and what valuations are there. We are still looking into it."

On July 8, IDFC and the Chennai-based Shriram group had entered into a 90-day merger discussion. Under the tentative arrangement, IDFC would be the holding company of the merged entity. Shriram City Union Finance, the retail lending arm of Shriram Capital,

“We will explore ways to see if the merger works out on the basis of what the RBI approves, and what valuations are there” AJAY PIRAMAL Chairman, Shriram Capital and Piramal Enterprises

would be merged with IDFC Bank and Shriram Transport Finance would be a fullyowned subsidiary of IDFC. IDFC would own 75 per cent of the life and general insurance arm of Shriram Capital.

After the merger, the mutual fund arm of IDFC would be integrated with Shriram Asset Management and could become listed.

Piramal, after launching Piramal Housing Finance company, said, “It is all about the opposition of shareholders. We (Piramal) are the largest shareholder (in Shriram) and we will not do anything that is not in the interest of shareholders. We have a vested interest to see that, but even otherwise, as a group, Piramal stood by to see that all shareholders get the most appropriate deal.”

Banking sources said discussions on valuations were still on, and some tweaking in the tentative plan presented in July was possible.