IDFC paying premium to get acquired, will IDFC be second time lucky?
After the failure of IDFC Bank-Shriram Group merger over valuation, IDFC Bank has now gone for merger with Capital First , a non-banking finance company. The all-share merger deal was done keeping in mind IDFC’s aim to achieve six million customer base by 2020. If the merger goes through, the share of retail loans in the bank’s book would double from the current 26%. And if IDFC becomes second time lucky with this deal, then it can realize its ambition from becoming a dedicated infrastructure financier to a well-diversified universal bank. While Capital First and IDFC seem relatively closer in size than Shriram Group, it remains to be seen if the deal can cross all the hurdles including regulatory as well as the problems of personality clashes that often bedevil mergers. Synergies in culture and technology will give the deal an edge. The deal makes some sense for IDFC as it can then expand its retail footprint with adding 228 centres of Capital First’s branches. If the merger g...