The board of directors of IDFC First Bank on Monday approved the merger of IDFC Limited with itself. For this, the share exchange ratio has also been fixed.
Shareholders of IDFC Limited will be allotted 155 shares in the bank for every 100 shares held. After the merger, the value of shares of IDFC First Bank will jump by 4.9 per cent.
IDFC First Bank said in the information given to the stock market on Monday that this is being done for the purpose of simplification of the corporate structure of IDFC FHCL, IDFC Limited and IDFC First Bank. The bank says that this will also make it easier to comply with the regulations. Significantly, this is the second largest merger in the financial sector in India after the merger of HDFC Bank and HDFC Bank.
What a big deal
No information has been provided by IDFC First Bank in this regard. However, if we look at the price of shares of both the companies till the market closes on Monday, then the valuation of this deal will be around Rs 71767 crore.
Pending approval
Right now this merger is yet to be approved by Reserve Bank of India (RBI), Competition Commission of India (CCI), SEBI, NCLT and all other regulatory institutions including stock markets. Apart from this, it is yet to be approved by the shareholders of both the companies.
Financial data of companies
By the end of the financial year 2022-23, IDFC First Bank had assets worth Rs 2.4 lakh crore. Its turnover was Rs 27,194 crore. In FY23, the bank had a net profit of Rs 2437 crore. On the other hand, if we talk about IDFC Limited, then till the end of the last financial year, there were assets of Rs 9570 crore and its turnover was Rs 2076 crore.
What will be the effect on shareholders?
On Monday, shares of IDFC First Bank closed at Rs 81.70, up 2.90 per cent on the NSE. At the same time, IDFC Limited closed at around Rs 110 with a gain of 7 per cent. If this merger happens, the investors of IDFC Limited will get additional shares and they will get huge profits due to the rise in the shares of IDFC First.
