Post merger, book value per share of IDFC First Bank would increase by 4.9%, as calculated on audited financials as of March 31, 2023.

The Board of Directors of IDFC First Bank Ltd on Monday approved merger of IDFC Ltd with the lender. The share exchange ratio for the amalgamation of IDFC Limited with IDFC First Bank shall be 155 equity shares of face value of Rs 10 of IDFC First Bank for every 100 equity shares of face value of Rs 10 of IDFC Limited. This comes days after Housing Development Finance Corp Ltd merged with HDFC Bank in a $40-billion deal, the largest in India’s corporate history.

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, said the lender.

On Monday, IDFC Ltd’s scrip on BSE closed 7% higher at Rs 110 while IDFC First Bank’s scrip on BSE closed 3% higher at Rs 81.7.

“The merger will lead to simplification of the corporate structure of IDFC FHCL, IDFC Limited and IDFC First Bank by consolidating them into a single entity and will help streamline the regulatory compliances of the aforesaid entities. The merger will help create an institution with diversified public and institutional shareholders, like other large private sector banks, with no promoter holding,” said IDFC First Bank in a stock exchange filing.

Sanjeeb Chaudhuri, Chairperson, IDFC FIRST Bank, said: “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.”

Speaking about the merger, V Vaidyanathan, MD & CEO, IDFC First Bank, said” “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.

“ India provides terrific opportunities for growth, and we have built significant specialisation in our business lines. We look forward to strong growth with quality in the years to come.”

IDFC Limited, an infrastructure financing institution (DFI), was allowed by RBI in April 2014 to set up IDFC Bank Limited. The bank started its operation in October 2015. The loan assets and liabilities of IDFC Limited were transferred to IDFC Bank. Capital First Limited was a successful consumer and MSME financing institution. On December 18, 2018, the IDFC Bank and Capital First merged, and subsequently renamed IDFC First Bank. As of June 30, 2023, IDFC Limited through its non-financial holding company has 39.93% shareholding of IDFC First Bank.

IDFC First Bank claims 4-year CAGR of 36% since the merger to reach Rs 1,36,812 crore by March 31, 2023. The Bank has increased CASA ratio from 8.6% at the time of merger with Capital First in December 2018, to 49.77% (March 31, 2023) and has set up 809 branches and 925 ATMs as of March 31, 2023.

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