IDFC Financial Holding Company to Merge with IDFC: A Strategic Consolidation for Enhanced Growth

IDFC First Bank has approved the merger of IDFC Limited and IDFC Financial Holding Company. Just three days after the merger in the banking sector led by Housing Development Finance Corporation (HDFC) group, this is another major merger deal.

IDFC First Bank filed this information with the exchange on Monday. This merger will be completed this year. However, the merger is subject to the approval of regulatory authorities such as RBI, SEBI, CCI, NCLT, BSE, NSE, and other relevant approvals.

After this merger, IDFC’s stake in IDFC First Bank will be extinguished. Currently, IDFC Limited holds approximately 40% stake in IDFC First Bank.

Sanjiv Chadha, the CEO of IDFC First Bank, stated, “We are committed to our long-term vision and will continue our growth journey in the coming years to create value for our shareholders.”

The shares of IDFC reached a 52-week high on Monday. IDFC’s shares closed at INR 109.20, rising by 6.3%. IDFC First Bank’s shares closed at INR 81.95, increasing by 3%. The merger has led to an increase in the company’s stock. After the merger, the bank’s shares will be directly held by IDFC First Bank shareholders, resulting in a 4.9% increase in stand-alone book value.

Why did the Merger Happen?

The merger aims to simplify the corporate structure. Following the merger, IDFC, IDFC First Bank, and IDFC First Financial Holding Company will be merged into a single entity. IDFC First Bank informed the exchange through a notice stating, “As a result of the merger, shareholders of IDFC Limited will become direct shareholders of IDFC First Bank. This holding structure will be simplified.”

What will Shareholders Receive?

Shareholders will receive the final plan in accordance with the approval of the merger between IDFC Limited and IDFC First Bank. Under this arrangement, the share ratio has been fixed at 155:100. This means that for every 100 shares of IDFC Limited, shareholders will receive 155 shares of IDFC First Bank.

In conclusion, the merger between IDFC Limited and IDFC First Bank has been approved, leading to significant developments in the stock market. The shares of both companies have witnessed an increase, reaching new highs. The merger aims to simplify the corporate structure and will result in IDFC First Bank directly holding the shares previously held by IDFC Limited shareholders. This merger holds the potential for further growth and value creation for the shareholders involved.