IDFC First Bank to merge with IDFC; Ratio fixed at 155:100

IDFC First Bank on Monday announced the merger of its parent IDFC Ltd with itself in an all-stock transaction as it will be India's largest corporate deal in the Indian banking space days after the amalgamation of the HDFC twins.

The boards of IDFC First Bank and IDFC have approved the reverse merger. Whereas the bank did not provide the likely valuation of the merged entity, based on Monday's closing prices of the two companies on BSE, the valuation is Rs 71,767 crore.

IDFC First Bank said in a statement that under the proposed reverse merger scheme, an IDFC shareholder will get 155 shares for every 100 shares she/he holds in the bank. Both stocks have a face value of Rs 10 each.

The share exchange ratio will result in a premium of about 20% on the closing market price of the shares of IDFC vis-a-vis IDFC First Bank as of June 30, 2023.

Post the merger, the standalone book value per share of the bank will increase by 4.9% as calculated on the audited financials as of March 2023, it said, adding as of June 2023, IDFC through its non-financial holding company, owned 39.93% in IDFC First Bank.

IDFC was an infra lender in the private sector space, and following its bigger peers like ICICI and IDBI, it also launched a banking subsidiary in 2015 -- IDFC Bank -- but could not make a mark as the other two could do.

The companies also appointed SSPA & Co, Chartered Accountants as a registered valuer for a recommendation of fair share exchange ratio and Cyril Amarchand Mangaldas - Law Firm for conducting legal due diligence, drafting and finalizing scheme of amalgamation and filing regulatory applications.

The bank in the filing said that 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," the bank said.

Source: Media reports