ICICI-BoR deal signals more M&As in banking sector: Analysts

ICICI Bank’s acquisition of Bank of Rajasthan will have a positive impact on the banking industry and lead to more consolidation in the sector, analysts said on Sunday.

“Overall, it is a positive move for the banking industry. It is good for the constituents of BoR - shareholders, customers (and) workforce. It will have a larger platform to work on with ICICI,” Ernst & Young India Director Viren Mehta said.

Mehta said, “Looking ahead, I don’t see a spate of mergers in the sectors, but I do see periodic M&As in the sector, as has been happening in the past.”

In a major acquisition deal, the country’s largest private sector lender, ICICI Bank, today announced the merger of BoR with it through share-swap in a non-cash deal that values BoR at about Rs. 3,000 crore.

Market analysts said consolidation in the banking sector was on the cards for quite some time and some more happenings may be seen in the coming days too.

“Consolidation in the banking sector was on the cards for quite some time and I see some more of this happening going forward,” SMC Capitals equity head Jagannadham Thunuguntla said.

On the BoR valuation, Thunuguntla said, “It may appear, in the short term that ICICI may be slightly overpaying, but acquisitions come with lot more benefits like scale, size and network.”

However, KPMG Executive Director, Advisory, Arvind Mahajan said that it still remains to be seen whether the deal, valuation and its trade-offs, if any, are going to be good for both the companies.

Last week, BoR shares gained 74 per cent on the BSE to settle at Rs. 144.40 at the end of Friday’s trade. The BoR counter has been hitting the circuit breaker almost every day since the merger talks began.

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Printable version | Jun 19, 2021 4:50:20 PM |

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