Boards of IDFC firms approve merger ratio

  • The merger entails the amalgamation of IDFC Financial Holding into and with IDFC, and of IDFC into and with the bank

Shayan Ghosh
First Published3 Jul 2023, 11:57 PM IST
The merger proposal was approved in principle by the boards in December 2021.
The merger proposal was approved in principle by the boards in December 2021.

The boards of IDFC Financial Holding Co. Ltd, IDFC Ltd, and IDFC First Bank on Monday approved a merger under which shareholders of IDFC will get 155 equity shares of the bank for every 100 shares held.

The merger entails the amalgamation of IDFC Financial Holding into and with IDFC, and of IDFC into and with the bank. The merger proposal was approved in principle by the boards in December 2021.

According to a regulatory filing on Monday, the merger will simplify the corporate structure of IDFC Financial Holding, IDFC Ltd, and IDFC First Bank by consolidating them into a single entity. This, it said, will help streamline the regulatory compliances. The merger will also help create an institution with diversified public and institutional shareholders, like other large private sector banks, with no promoter holding, it said.

As a result of the proposed merger, the standalone book value per share of the bank would rise by 4.9%, as of 31 March.

The merger is subject to approvals from the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi), the Competition Commission of India, the National Company Law Tribunal (NCLT), the stock exchanges and other statutory and regulatory authorities, and the respective shareholders.

“We look forward to building on our vision to create a world-class bank in India with the support of existing and new shareholders,” said V. Vaidyanathan, managing director and chief executive of IDFC First Bank.

Anil Singhvi, chairman of IDFC Ltd, said that as IDFC looks to conclude the last phase of its corporate restructuring, the merger with IDFC First Bank will help create a financial services powerhouse enabling seamless delivery of services to our customers.

“It will augment operational efficiency for the merged entity and create synergies for our shareholders,” Singhvi said.

In April 2014, the Reserve Bank of India (RBI) granted in-principle approval to IDFC to set up a bank, leading to the creation of IDFC Bank Ltd and IDFC Financial Holding Co. All the regulated businesses were transferred to the IDFC FHCL following the approval. In December 2018, IDFC Bank and Capital First Ltd merged and was subsequently renamed IDFC First Bank.

As a promoter, IDFC was required to hold a minimum of 40% equity in the bank for five years, till 30 September 2020.

“Post-in-principle approval to merge IDFC and IDFC FHCL with the bank, granted in December 2021, the board of IDFC is working untiringly to get the best value of its asset and noteworthy was the sale of AMC business to Bandhan Group,” IDFC Ltd said in a statement on Monday.

The private lender has a loan book of 1.61 trillion with a balance sheet size of 2.4 trillion as on 31 March. The bank reported a profit after tax of 2,437 crore in FY23 and aims to grow its balance sheet by 20-25% per year in the near to medium term.

Deloitte Touche Tohmatsu India LLP and Harsh Chandrakant Ruparelia acted as valuers to IDFC First Bank; ICICI Securities provided a fairness opinion on the valuation provided by the valuers. AZB & Partners acted as legal advisors to IDFC First Bank, and JM Financial Ltd acted as the financial adviser.

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First Published:3 Jul 2023, 11:57 PM IST
HomeCompaniesBoards of IDFC firms approve merger ratio

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