Merger of bandhan with gruh - Good or Bad??

Since last week, I am heating the loud noise the recent merger between Bandhan Bank and Gruh finance has created. I also got concerns from couple of my friends stating that this is not a good marriage.

As an investor let me give you the some points as to why this marriage is made in heaven [in short, this marriage is good news for the investors of both entities + investors of HDFC Bank + small MFI's].

  • Per new arrangement, shareholding of HDFC will be 14.95% 
  • As per the norms, one entity [in this case, HDFC] can own maximum 9.9% in merged entity; so HDFC will dilute its holding in merged entity -> which will have direct positive effect on HDFC Bank. 
  • Both entities [Bandhan & Gruh] has overlapping customer base; so after arrangement Bandhan will have quality data on book. 
  •  After merger, dominance in East and West; plus war chest to acquire another small NBFC or MFI to get dominance in another region [this is just a personal hypothesis]. 
So now you tell me as an investors ain't this a win-win deal???

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