Kotak May Buy Indusind Bank – Burning Issues

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What happened?

As per a report, Kotak Mahindra Bank Ltd., backed by Asia’s richest banker, is exploring a takeover of smaller Indian rival IndusInd Bank Ltd.,
A move that would create the nation’s eighth-largest financial firm by assets.
Uday Kotak, founder and chief executive officer of Kotak Mahindra, is looking at the possibility of an all-stock acquisition.
The discussions are still private.
Uday Kotak and the Hinduja family have held initial talks over the proposal in which the founders of IndusInd Bank could retain a stake in the lender after a deal.

A deal would cement Kotak Mahindra’s position as one of India’s leading private banks,
Boosting its assets by about 83%.
Kotak in 2014 acquired the local unit of ING Groep NV for $2 billion in the largest takeover of a lender in India.

It would also throw a lifeline to IndusInd, which has seen its market value drop 60% to $6 billion this year,
After being hit by concerns over worsening asset quality and an erosion of low-cost deposits.
As against this Kotak Bank is only 20% down from its 52-week high even after a dilution and has a market cap of over Rs 2.7 lakh crore.
A merger at current prices would bring the Hinduja promoter holding to just above 2%.

The U.K.-based Hinduja family began discussions for selling control of the Mumbai-based lender,
Following a dispute between the four brothers over the future of the family’s $11.2 billion fortune.

A deal between Kotak and IndusInd would find favour with the banking regulator,
As Kotak Bank has a strong capital base and a good asset quality, which gives it a high capacity to absorb a smaller bank.
Promoter Uday Kotak’s stake in his bank has fallen to about 26% after a qualified institutional placement of shares worth Rs 7,442 crore amid the lockdown.

Q) Arrange the following assets in the decreasing order of liquidity.