Stake dilution post IDFC-Shriram merger concerns govt and Malaysian fund Khazanah

The Centre, which holds 16.38 percent stake in IDFC, has expressed its displeasure over the planned merger between Shriram Capital and its associate companies with IDFC and its subsidiary IDFC Bank on concerns of substantial dilution of ownership which would take place post merger, reports The Economic Times.
The report states that both sides are working on common agreeable alternate arrangement as they were not able to resolve the issues. The government has two nominees on the board of IDFC.
Another significant IDFC investor, Malaysian sovereign wealth fund Khazanah, which has 9.5 percent stake in the company and a nominee on the board, has opposed the merger proposal.
The companies have already extended exclusivity agreement by a month to November 8 after the initial 90-day exclusivity agreement, which was signed on July 9, ended on October 8. Stakeholders’ concerns and the merger proposal would be taken up by IDFC board for a discussion on October 30.
Rajiv Lall, CEO of IDFC Bank, has said that proposed merger is a “marriage made in heaven” as they complement each other and the combined entity would create a financial conglomerate worth USD 10 billion.



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