IDFC To Merge With IDFC First Bank As a result of the proposed merger, the standalone book value per share of the Bank would increase by 4.9%, as calculated on audited financials as of March 31, 2023
By Teena Jose •
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The Board of Directors of IDFC FIRST Bank Limited at its meeting held today, July 03, 2023, have approved the Scheme of Amalgamation of IDFC Limited with IDFC FIRST Bank. As a result of the proposed merger, the standalone book value per share of the Bank would increase by 4.9%, as calculated on audited financials as of March 31, 2023.
"With this merger, we are very happy to welcome all the shareholders of IDFC Limited to become direct shareholders of IDFC FIRST Bank. We have built a strong foundation for our Bank including a strong deposit franchise, digital innovation, customer friendly products, strong capital buffer, growing profitability and high corporate governance. 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, MD and CEO, IDFC FIRST Bank.
The merger proposal says the share exchange ratio will be 155 equity shares of the face value of INR 10 each of IDFC First Bank for every 100 fully paid-up equity shares of the face value of INR 10 each of IDFC Ltd.
The merger aims to streamline regulatory compliance and create an institution with diversified public and institutional shareholders, similar to other large private sector banks, eliminating any promoter holding.
According to an official statement, the merger is subject to obtaining requisite approvals from regulatory authorities. Additionally, shareholder approval will also be required under applicable law. IDFC Limited, a prominent infrastructure financing Domestic Financial Institution (DFI) since 1997, received "in-principle" approval from the RBI to establish a bank in April 2014.
Subsequently, on December 18, 2018, IDFC Bank merged with Capital First Limited, resulting in the formation of IDFC First Bank. Currently, IDFC Limited holds a 39.93 per cent shareholding in IDFC First Bank through its non-financial holding company.
The merger will also help create an institution with diversified public and institutional shareholders, like other large private sector banks, with no promoter holding, the bank said in a stock exchange filing.
"This is an important event for the Bank and for all the shareholders of the Bank as well as IDFC Limited. We now embark on the next phase of our growth journey towards our long-term vision, and to create sustainable shareholder value in the years to come," said Sanjeeb Chaudhuri, chairperson, IDFC FIRST Bank.
