IDFC First Bank Limited Majority Shareholder’s Approved For The Amalgamation Of IDFC Limited With Itself
IDFC First Bank Limited has informed the national and Bombay stock exchanges regarding the shareholder’s approval for amalgamation scheme on NCLT meeting held on 17th May, 2024
Overview
The IDFC Financial Holding Company Limited, IDFC Limited and IDFC First Bank Limited boards approved for the reverse merger on July,2023.
The Reserve Bank of India (RBI) has provided its No Objection Certificate (NOC) for the amalgamation of IDFC Limited, IDFC Financial Holding Company Limited and IDFC First Bank on 27th December ,2023.
On 17th May, 2024, The National Company Law Tribunal (NCLT) convened a meeting to consider and approve the composite amalgamation scheme of IDFC FIRST Bank. Through this amalgamation scheme, IDFC Financial Holding Company (Transferor company) will be merged into and within IDFC Limited (Transferee Company) and IDFC Limited (Amalgamating Company) into and within IDFC First Bank (Amalgamated Company). Majority of the public equity shareholder’s (99.5%) approved the amalgamation scheme resolution through e-voting facility during the meeting and through remote e-voting facility.
Details Of the Amalgamation Scheme
The exchange rate for merging IDFC Limited with IDFC FIRST Bank share is set at 155 shares of IDFC FIRST Bank for every 100 shares of IDFC Limited.
Instead of existing 264.64 crore shares of IDFC Limited, new 248 crore shares of IDFC First Bank Limited will be issued to IDFC Limited shareholders after the amalgamation.
Post reverse merger, the book value of the IDFC First Bank Limited might rise by 4.9%.
Key Benefits of This Amalgamation Scheme
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IDFC Limited shareholders will become direct shareholders of IDFC FIRST Bank limited after the reverse merger.
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The corporate framework of IDFC FHCL, IDFC Limited, and IDFC FIRST Bank will be simplified for accounting and regulation.
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Creation of an institution with diversified public and institutional shareholders, similar to other large successful Indian private sector banks.
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Easier equity capital raising in an institution with a diversified shareholder base."
Overview of the Amalgamating Entities
IDFC Limited, a leading infrastructure financing institution since 1997, received RBI approval in April 2014 to establish a bank, resulting in IDFC Bank Limited, which began operations in October 2015. The loan assets and liabilities, primarily consisting of infrastructure and corporate loans, were transferred from IDFC Limited to IDFC Bank. Capital First Limited, a successful consumer and MSME financing institution since 2012, merged with IDFC Bank on December 18, 2018, forming IDFC FIRST Bank. As on 30th June ,2023, IDFC Limited holds 39.93% shares in IDFC FIRST Bank Limited through its non-financial holding company.
IDFC FIRST Bank with its universal banking business across India. The Bank's deposit has 4-year CAGR of 36%, with its value of Rs. 136,812 crores by 31st March, 2023. The CASA ratio increased from 8.6% in 49.77% in the last five years with bank 809 branches and 925 ATMs.
The Bank boasts a diversified loan book of Rs. 1,60,599 crore and a balance sheet size of Rs. 239,942 crores as of March 31, 2023. It recorded a PAT of Rs. 2,437 crores in FY23, with a Capital Adequacy of 16.82%. The Gross NPA is 1.65%, and Net NPA is 0.55%.The Bank's Gross NPA is 2.51%, and Net NPA is 0.86%, with infrastructure financing Gross NPA at 25.11% and Net NPA at 15.73%.
CRISIL and India Ratings for IDFC First Bank Limited is AA+.
Conclusion
IDFC Limited shareholders will become direct shareholders of IDFC FIRST Bank after this amalgamation process which will get completed within 6 to 9 months.
Frequently Asked Questions
What is the purpose of the NCLT meeting held on May 17, 2024?
The NCLT meeting was held for the shareholders’ approval through e-voting for amalgamation scheme of IDFC FIRST Bank, involving the merger of IDFC Financial Holding Company ,IDFC Limited and IDFC FIRST Bank.
How will the amalgamation affect shareholders of IDFC Limited?
Shareholders of IDFC Limited will directly hold shares in IDFC FIRST Bank post-merger. As per the share exchange rate, for every 100 shares of IDFC Limited, shareholders will receive 155 shares of IDFC FIRST Bank.
What are the key benefits of the amalgamation scheme?
The benefits include IDFC Limited shareholders will become IDFC First Bank shareholders , streamlining of corporate structure, creation of a diversified shareholder base, and facilitating easier equity capital raising. Additionally, it will lead to a 4.9% increase in the standalone book value per share of IDFC FIRST Bank Limited.
Where to find the share price of IDFC Limited?
The share price of IDFC Limited is Rs.114.35 as on 20th May,2024.
Where to find the share price of IDFC First Bank Limited?
The share price of IDFC First Bank Limited is Rs.77.45 as on 20th May,2024.
