Gruh Finance in a "Bandhan"

Gruh Finance is the top most trending stock on the social media today. The stock rose over 3.2% to Rs.329 in the morning but is now just about holding on to the green.

On the other hand, Bandhan Bank fell almost 4.5% to Rs.505.60 and it continues to remain in the red.

These two companies are obviously in the limelight. As per RBI’s banking licence rules, promoter, Bandhan Financial Holdings had to bring down its stake from 82.3% to 40% within three years of starting business.  Well, that did not happen, post which, in Sept, RBI placed restrictions on Bandhan Bank for its failure to meet the rules by freezing branch expansion and remuneration of founder and chief executive.

And in a bid to cut stake, news is that, Bandhan Bank will be acquiring Gruh Finance via a share swap.  HDFC currently owns 57.83% stake in Gruh Finance and as per the new scheme, shareholders of Gruh will receive three shares of Bandhan Bank for every five shares held in the home financier.

All this is unconfirmed news as both the companies are yet to officially announce anything.

HDFC will also cut its stake further by around 5.5% (in the merged entity) by selling shares to a clutch of public institutional investors or in the secondary market so that HDFC’s total holding as a promoter in the combined banking entity is brought down below 10%.

The merger will result in HDFC’s ownership falling to 15.44% in the merged entity and Bandhan Financial’s share dropping to around 60.27%. But given the fact that Bandhan’s stake will have to be brought down to below 40%, obviously, more will need to be done to trim the promoter stake.