IndusInd Bank share price rallied over 4 per cent intraday on the Bombay Stock Exchange on Monday amid report that Uday Kotak-led Kotak Mahindra Bank is exploring a potential takeover of the private lender. The promoters of Kotak Mahindra and IndusInd Bank held discussions for the merger via a share swap, but no decision has been taken yet, according to a Bloomberg report.
Boosted by the development, shares of IndusInd Bank gained as much as 4.2 per cent to hit an intraday high of Rs 633 after opening higher at Rs 615.25 against previous closing price of Rs 607.45.
In a similar trend, stock of IndusInd Bank was trading at Rs 615.40, up 1.19 per cent, on the National Stock Exchange. During the day's trade, the stock hit an intraday high of Rs 633.30 against Friday's closing price of Rs 608.15.
In contrast, shares of Kotak Mahindra Bank were down 2.34 per cent at Rs 1350.70 on the BSE.
If the deal with IndusInd Bank succeeded, it could boost Kotak Mahindra Bank's presence in the Indian private banking space, especially in the retail segment. The market value of Kotak Mahindra Bank is around Rs 2.75 lakh crore, while IndusInd Bank is estimated to be around Rs 50,000 crore.
Kotak Mahindra Group has also refused to comment on the merger report.
Meanwhile, IndusInd Bank's promoter, IndusInd International Holdings Limited (IIHL), has denied this media report, calling it malicious, untrue and baseless. The Mauritius-based promoter is promoted by the Hindujas and a broad base of other successful NRIs from the overseas Indian diaspora.
The Promoter reaffirms its unstinted support to the IndusInd Bank.
"Whenever financial crises have impacted the Indian economy and its financial institutions, the Promoter of the IndusInd Bank has positively intervened to support and improve the financial position of the bank. It has a solid track record of facilitating the acquisitions in 2002 of IndusInd Enterprises and Finance Ltd (IEFL) by the bank, followed by another one of Ashok Leyland Finance Ltd (ALF) in 2004. Very recently in July 2019, it supported the acquisition of Bharat Financial Inclusion Ltd (BFIL) by the IndusInd Bank. The Promoter would continue to support IndusInd Bank's initiatives to grow inorganically should any such opportunities arise on the horizon in the future," the promoters said in a regulatory filing.
"It is worth recalling that amongst the 9 original licensees (4 institutional and 5 private) that were allowed to set up banking operations in 1994, IndusInd Bank is the only privately promoted bank that successfully continues its operations because of the promoter support," it added.