Image courtesy: indiantelevision.com
According to sources, some of the ING Vysya shareholders feel that the deal between ING Vysya and Kotak Mahindra will bring more gains for the latter. Some officials were thinking of approaching Kotak Mahindra and request it to reconsider its decision regarding the swap ratio.
This valuation has brought more benefits to Kotak Mahindra, considering it’s four times book value against two times book value of ING Vysya. After this deal, ING Vysya Bank has gained two times in its book value or share price at Rs 790, even after the premium of 16 percent over the period of 30 days, the closing price was Rs 690. While Kotak Mahindra’s share closed on November 19 at Rs 1090.
“The transaction is beneficial from Kotak Bank’s point of view; however, ING shareholders would have got a better deal given its higher loan growth, better NIM and fees, improvement in asset quality and stable outlook,” told Chief Investment officer of a leading asset management company and one of the shareholders in ING Vysya Bank. He further added that they will request Kotak Mahindra to think again on its decision. To pass this deal it requires approval of 73 percent shareholders of ING Vysya, those who will participate in voting system.
“ From ING shareholder point of view, the parent ING could have commanded a much higher premium given high promoter holding in their bank, strong ING brand, clean balance sheet and diversified loan book with high CASA proportion,” said Darpin Shah, a banking analyst at HDFC Securities.