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The Potential that HDFC and Bandhan Bank Tapped Into...
Jan 8, 2019

Mergers and acquisitions are typically evaluated based on the synergies of the businesses and valuations offered. Rightly so.

But apart from that they also need to be evaluated based on whether the deal is only focused on growth or even strengthening the moat of the combined entity. And whether the deal is a win-win for shareholders of both the entities.

Turns out Bandhan Bank's acquisition of Gruh Finance is a winner on all counts. Not that the bank has struck a bargain in the share swap ratio. Rather Gruh Finance has been richly valued. But Gruh Finance could help Bandhan become more than a bigger bank.

Although HDFC (parent of Gruh Finance) is not directly involved in the deal, it is evident that both HDFC and Bandhan Bank want a bigger share of the rural pie. The exponential growth that rural banking has witnessed over past few years offers huge scope. Especially, for entities with proven credit appraisal history.

Data Source: RBI Publication

This Chart Of The Day was published in The 5 Minute WrapUp - The First Corporate Merger of 2019 Supports this Irreversible Trend

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