Further to our understanding gained from talking to some higher authorities as part of our primary research into the stock, we hold for our PMS clients
As per RBI rules, IDFC can’t exceed 40% shareholding in the bank. Given that IDFC holds around 36.5% stake already in the bank, the bank can max put in capital equivalent to a 3.5% odd stake in the bank. At current prices, this may be around 1300-1500 cr. Given that IDFC would have 4k cr, the balance would have to be adjusted in the swap price at the time of the merger and given along with the final merger maybe a year down the line or given partly as a dividend now and partly in the form of better swap ratio.
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