IDFC Set To Merge With IDFC First Bank
The share swap ratio for the merger includes issuance of 155 IDFC First Bank shares for every 100 shares of IDFC held.
The board of IDFC First Bank Ltd. approved a proposal to merge IDFC Ltd. and IDFC Financial Holding Co. with the bank.
The merger is subject to approvals from regulators and other statutory entities, the private bank said in an exchange notice on Monday.
The merger includes:
Merger of IDFC Financial Holding Co. and IDFC with the bank.
Reduction of the securities premium account of the bank.
The share swap ratio for the merger includes issuance of 155 IDFC First Bank shares for every 100 shares of IDFC held.
The parent company IDFC currently holds 39.93% stake in IDFC First Bank through the non-financial holding company, IDFC Financial Holding Co. This shareholding would be completely extinguished on the completion of the merger.
"The merger will help create an institution with diversified public and institutional shareholders, like other large private sector banks, with no promoter holding," the bank said in its exchange filing.
The announcement by IDFC First Bank comes only days after HDFC Ltd. merged into HDFC Bank Ltd. on July 1.
The Reserve Bank of India's licensing guidelines had prescribed a five-year lock-in period, after which IDFC would cease to be a promoter of IDFC First Bank.
While IDFC had been given an in-principle licence by the RBI in 2014, the bank started operations in 2015. Then, IDFC Bank was merged with non-banking finance company Capital First Ltd. in 2018. As a promoter, IDFC was required to hold a minimum of 40% equity stake in IDFC First Bank for five years from the start of the operations.
"The amalgamation will result in the shareholders of IDFC Ltd. directly holding shares in IDFC First Bank, which will lead to simplification of the shareholding structure," the bank said, in its exchange notice.
In September 2021, shareholders of IDFC voted out then Chairman Vinod Rai, owing to the delay in selling the company's asset management business. The delay was considered an impediment for the merger with the bank.
Later, in December 2021, the board appointed Anil Singhvi as the chairman of the IDFC board. The board had also given an in-principle approval for the merger at the time.
In April 2022, IDFC sold IDFC Asset Management Co. and IDFC AMC Trustee to Bandhan Bank Ltd., in a Rs 4,500 crore deal.
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. AZB & Partners acted as legal advisors, while JM Financial acted as financial advisers to IDFC First Bank.
SSPA & Co were valuers for IDFC, while Axis Capital provided fairness opinion. Law firm Cyril Amarchand Mangaldas acted as legal advisers for IDFC.
