IDFC Ltd to invest Rs 2,200 crore into IDFC First Bank

IDFC Ltd, the holding parent company, announced plans to invest a sum of Rs 2,200 crore into IDFC First Bank. This will be instrumental in enhancing its stake in IDFC First Bank from  36.38% to 40.00%. IDFC First Bank will greatly benefit from this move as it will provide immense growth capital to the bank, as it needs to shore up its capital adequacy to be able to expand its lending book further. 

In the last five quarters, the share of foreign portfolio investors in IDFC First Bank has increased from 14.77% to 19.76%. During the same period, the share of domestic institutional investors (DIIs) reduced from 14.58% to 13.84%. This would slightly turn the tables in favour of DIIs. IDFC Ltd also declared a special interim dividend of Rs 11 per share subject to shareholder approval.

The Government of India, which is the largest shareholder in IDFC Ltd, will receive a total dividend pay-out of Rs287 crores via this special dividend. The company also said that this declaration is the largest dividend per share ever provided by IDFC Ltd in its entire history. 

It may be recollected It added that the boards of IDFC, its subsidiary IDFC Finance Holdings Ltd and IDFC First Bank decided to participate in a reverse merger back in December 2021. The merger would be worth Rs 4,000 crore and would be largely funded by the sale of stake in IDFC AMC to Bandhan Bank. As of date, the swap ratio is yet to be finalized, which is currently under discussion. Only after the swap ratios are finalized, the final approval of the shareholders of both the entities, the creditors, the RBI, SEBI, CCI and NCLT can be sought. The entire process is likely to take more time to fructify.