IDFC FIRST Bank announced today, following its Board meeting, that the merger with IDFC Limited has been successfully completed after obtaining all necessary shareholder and regulatory approvals. The merger will be effective from October 01, 2024.
As a result, shareholders of IDFC Limited will receive 155 equity shares of IDFC FIRST Bank for every 100 equity shares held in IDFC Limited, based on the record date of October 10, 2024. The new shares are expected to be credited to shareholders by October 31, 2024, subject to regulatory processes and clearances.
Benefits of the Amalgamation for IDFC FIRST Bank:
1. Simplified Corporate Structure: Post-merger, the Bank will have a streamlined corporate structure with no holding company.
2. Simplified Shareholding Structure:The shareholding structure will align with other leading private sector banks in India, with no promoter holding. The Bank will continue to be a professionally managed institution.
3. Increased Cash Reserves: The merger will result in an inflow of approximately ₹600 crores in cash and cash equivalents to the Bank.
4. Reduction in Paid-Up Share Capital: 2,64,64,38,348 equity shares held by IDFC Limited in IDFC FIRST Bank will be cancelled, and 2,47,99,75,876 new equity shares will be issued to IDFC Limited shareholders as per the agreed swap ratio. This will reduce the Bank’s paid-up share capital from 7,48,27,31,991 shares to 7,31,62,69,519 shares.
5.Eligibility to Pay Dividends: Previously, accumulated losses restricted the Bank’s ability to pay dividends. These losses will be set off against the Bank’s Securities Premium Account as part of the merger, enabling the Bank to consider dividend distribution in the future.
6. Unification & streamlining of the regulatory compliances.
7. India is a fast-growing country, and such growth will open up immense opportunities over the next couple of decades. With a simplified shareholding and corporate structure, and strong capabilities and brand built at the Bank, and with a complete range of services of a Universal Bank, the Bank is well placed to grow with the enormous opportunities India offers.
Speaking about the merger, Mr. Vaidyanathan, MD & CEO, IDFC FIRST Bank Limited, said:
“The announcement of merger today between IDFC FIRST bank and IDFC Ltd brings closure to the intense work over the last 2 years. I am sincerely thankful for IDFC Ltd for simplifying the structure and clearing the decks and for fruitful discussions, which helped put the merger together. I am also thankful to all the regulatory authorities for their excellent guidance and support which led to the successful completion of this merger.
IDFC FIRST Bank will now have a simplified corporate structure with no promoter holding. All global corporations like Bank of America, JP Morgan, HDFC Bank, ICICI Bank are professionally managed institutions with no promoter holding. Similarly, IDFC FIRST Bank can also build itself into a perennial institution like them. In that sense this merger is a landmark moment for the Bank.
The Indian economy is expected to increase from USD 3.5 trillion to USD 30-35 trillion by 2047 which will lead to immense opportunities across all parts of banking. Notably the Indian credit market is expected to grow 15x in the next 20 years. Being an early-stage bank with a lower base, IDFC FIRST Bank can now participate in this growth at an accelerated pace.
In addition to the credit growth, such growth in the Indian Economy also opens opportunities for trade finance, foreign exchange, transaction banking, cash management etc. Further, the wealth management industry is also expected to grow exponentially as India grows richer, a business in which IDFC FIRST Bank has made strong presence in the past many years with AUM of over Rs. 18,000 crores, growing at over 50% per year.
Over the last 5 years, IDFC FIRST Bank has built a strong foundation, excellent working culture, ethical banking approach, high focus on digitization & technology and a focus on Social good. We believe these essential foundations built will help IDFC FIRST Bank to grow into a world class bank in the future.”
