IDFC to merge with IDFC first Bank: Ratio fixed at 155:100

The Board of Directors of IDFC First Bank Ltd at its meeting held on July 3, 2023, approved the scheme of amalgamation of IDFC Ltd with IDFC First Bank. The ratio has been fixed at 155:100.

“Under the proposed merger, for every 100 shares of IDFC Ltd that an investor holds, they will receive 155 shares of IDFC FIRST Bank. The face value of each share for both IDFC Ltd and IDFC FIRST Bank is Rs 10”, said IDFC First Bank in a regulatory filing to the stock exchange.

As a result of the proposed merger, the book value per share of the bank would increase by 4.9% as calculated on audited financials as of March 31, 2023.

This will be the second major merger deal in the financial sector in 2023 after HDFC Bank merged with Housing Development Finance Corporation.

According to IDFC First Bank, the merger will lead to simplification of the corporate structure of IDFC FHCL, IDFC Ltd, and IDFC FIRST Bank by consolidating them into a single entity and will help streamline the regulatory compliances of the aforesaid entities, the bank said on the rationale of the merger.

The companies have successfully completed all the stages of corporate simplifications, as stated in an exchange filing. According to the company, the next phase involves amalgamation with IDFC First Bank Ltd. They intend to finalise the amalgamation within the current financial year unless there are any unforeseen circumstances that may impact the timeline.

IDFC Bank was given a licence by the RBI in 2014. In 2018, IDFC Bank Ltd and Capital First Ltd announced the completion of the merger to become IDFC First Bank.

If FY23, IDFC First Bank’s loan book is at Rs 1,60,599 crore. The bank’s Gross Non-Performing Asset stands at 2.51%, while the Net Non-Performing Asset is at 0.86%. The casa ratio, indicating the proportion of low-cost deposits, is reported at 49.8%. Furthermore, the company has recorded a net profit of Rs 2,437 crore in FY23.

The merger is based upon obtaining approvals from various regulatory bodies and authorities such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI), National Company Law Tribunal (NCLT), BSE, National Stock Exchange of India (NSE), as well as other statutory and regulatory entities. Additionally, the amalgamation requires the consent of the respective shareholders in accordance with applicable laws.