IDFC, Shriram Group to announce merger on July 8 to create over $10 bn company: Sources

IDFC and Shriram Group are exploring options to merge various businesses to create a financial powerhouse worth over USD 10 billion, sources told CNBC-TV18. An announcement is likely to be made on July 8.

The channel was the first to report the possibility of such a deal, which had led the stock prices of IDFC and IDFC Bank to surge 10 percent Wednesday.

Read More: IDFC Bank, IDFC rally 10% on buzz of acquisition in financial services segment

As per available information, the entire lending business of holding company Shriram Capital which includes listed entities -- Shriram Transport Finance and Shriram City Union Finance -- will be merged with IDFC Bank. The unlisted entities under Shriram Capital, which include the life and general insurance companies, will be merged with IDFC.

In the absence of clarity on RBI's take on a reverse merger, IDFC will continue to remain IDFC Bank's promoter company.

It must be noted that IDFC Bank, at the time it started out as a new bank a year ago, listed out their need to diversify footprint in the retail business and acquire more retail businesses to diversify from its corporate lineage.

IDFC and Shriram are said to have exclusivity of 90-120 days for merger talks.

While Shriram Group declined any comments on the deal, IDFC said, 'We remain particularly focused on financial inclusion. At this point there is nothing that requires disclosure."