IDFC First Bank has received approval from its board for the merger of IDFC Ltd and IDFC Financial Holding Company with itself through a scheme of amalgamation. This merger comes as the second major deal in the financial sector following the merger of HDFC Bank and Housing Development Finance Corporation.
Under the proposed merger, IDFC Ltd shareholders will receive 155 shares of IDFC First Bank for every 100 shares held in the former company. In an exchange filing, IDFC First Bank stated, The board of directors of the bank has accorded approval for the execution of an implementation of agreement between IDFC Ltd and IDFC First Bank, which sets out the manner of implementing the proposed transaction.
However, the merger is still subject to approvals from various regulatory authorities, including the Reserve Bank of India, Sebi, the Competition Commission of India, the National Company Law Tribunal, the stock exchanges, and the shareholders of both listed firms.
Currently, IDFC Ltd holds a 40% stake in IDFC First Bank through IDFC Financial Holding, with IDFC Ltd being 100% publicly held. As of the end of March, IDFC First Bank had total assets of Rs 2.4 lakh crore and a turnover of Rs 27,194.51 crore. For the fiscal year 2022-23, the bank reported a net profit of Rs 2437.13 crore.
On the other hand, IDFC Ltd had total assets of Rs 9,570.64 crore and a turnover of Rs 2,076 crore. With this merger, IDFC First Bank aims to strengthen its position in the financial market and consolidate its operations.
Overall, the approval of this merger is a significant step towards restructuring in the financial sector, following the footsteps of other major merger deals. If all goes well and the merger receives the necessary approvals, it is expected to bring about positive changes and synergies for both companies, contributing to their growth and success in the long run.
