IDFC First Bank has announced the approval of the merger between IDFC Limited and IDFC Financial Holding Company by its board of directors. This significant merger marks a major deal in the financial sector, following the merger of HDFC Bank and HDFC Limited. Shareholders of IDFC Limited will receive 155 shares of IDFC First Bank for every 100 shares held in IDFC.
Awaiting regulatory approvals: While the approval from IDFC First Bank's board is in place, the merger still requires regulatory approvals from the Reserve Bank of India (RBI), as well as other regulatory authorities such as SEBI, Competition Commission of India, National Company Law Tribunal, and the stock exchanges (BSE, NSE). These approvals will be crucial for the successful completion of the merger.
Changes in shareholding: As part of the merger, IDFC Limited's 40% stake in IDFC First Bank, held through IDFC Financial Holding, will be dissolved, resulting in a change in shareholding for both entities.
Financial standing of IDFC First Bank and IDFC Limited: As of March 2023, IDFC First Bank reported total assets of Rs 2.4 lakh crore, a turnover of Rs 27,194.51 crore, and a net profit of Rs 2437.13 crore for the financial year. In comparison, IDFC Limited recorded total assets of Rs 9,570.64 crore and a turnover of Rs 2,076 crore.
Market response and stock performance: Anticipating the merger news, IDFC's stock experienced a strong surge in the stock market, reaching a 52-week high. On Monday, IDFC's stock traded at Rs 109.20 per share, reflecting a 6.3% increase. IDFC First Bank's share closed the trading session at Rs 81.95 per share, with a 3% gain.
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