IDFC First Bank Welcomes IDFC Shareholders In Epic Merger Move

IDFC and IDFC First Bank have officially announced the approval of a share swap between their boards, solidifying a merger ratio of 155:100. This means that for every 100 shares held in IDFC, shareholders will receive 155 shares of IDFC First Bank.

The merger holds significant benefits for IDFC shareholders as it provides them with direct ownership of IDFC First Bank.

V Vaidyanathan, the managing director of IDFC First Bank, expressed his enthusiasm, stating, "With this merger, we are very happy to welcome all the shareholders of IDFC to become direct shareholders of IDFC First Bank."

He highlighted the bank's strong foundation, including a robust deposit franchise, digital innovation, customer-friendly products, capital buffer, profitability, and corporate governance.

According to audited financials as of March 31, 2023, the merger is projected to result in a 4.9% growth in the individual book value per share of the bank.

Anil Singhvi, the IDFC chairman, highlighted the favorable effects of the merger on operational efficiency and the harmonization of interests among shareholders, expressing that it would enhance operational efficiency for the combined organization and generate synergies for shareholders.

Under the scheme of amalgamation, eligible shareholders of IDFC will receive 155 new equity shares of ₹10 face value each, effectively canceling the shareholding of IDFC held through IDFC Financial Holding in its entirety.

The share exchange ratio results in a premium of approximately 20% on the closing market price of IDFC shares compared to IDFC First Bank's shares on June 30. Additionally, IDFC distributed a special dividend of ₹11 per share to its shareholders in February.

Previously, as per the Reserve Bank of India's licensing rules, IDFC was required to maintain a minimum of 40% equity in the bank until September 30, 2020. However, IDFC received in-principle approval from the RBI to merge IDFC and its holding company with the bank, marking the completion of the final phase of its corporate restructuring.

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