IDFC-IDFC First merger: Share swap gives IDFC investors direct shareholding in bank

IDFC First Bank and IDFC said their respective boards have approved a merger ratio of 155 shares of IDFC First Bank for every 100 shares held in IDFC. The institutions added taht the merger will create value for IDFC’s shareholders, providing them with direct shareholding in IDFC First Bank.

The proposed merger is expected to increase the standalone book value per share of IDFC First Bank by 4.9 per cent, based on audited financials as of March 31, 2023.

The merger aims to simplify the corporate structure of IDFC FHCL, IDFC Ltd and IDFC First Bank by consolidating them into a single entity, streamlining regulatory compliances for the entities involved, said a statement from the IDFC First Bank board.

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“The merger will create an institution with diversified public and institutional shareholders, similar to other large private sector banks, without any promoter holding,” it added.

Infrastructure financing firm IDFC had received in-principle approval from the RBI to establish a bank in April 2014, leading to the formation of IDFC Bank. The bank started operations in October 2015, after the transfer of loan assets and liabilities from IDFC Ltd. 

In December 2018, IDFC Bank merged with Capital First Ltd, a consumer and MSME financing institution. The merged entity was subsequently renamed IDFC First Bank. As on June 30, 2023, IDFC Ltd, through its non-financial holding company, holds a 39.93 per cent shareholding in IDFC First Bank.

According to the statement, IDFC First Bank is a full-service universal bank with a pan-India presence. Over the past four years, it has transitioned from infrastructure financing to a universal banking franchise.