Cap­i­tal First to merge with IDFC Bank in all-stock deal

The Hitavada - - BUSINESS - MUMBAI, Jan 13 (PTI)

ONE of the youngest pri­vate lenders IDFC Bank and War­burg Pin­cus-backed non-bank­ing fi­nan­cial com­pany Cap­i­tal First on Satur­day an­nounced a merger in an all-stock deal, creat­ing a Rs 88,000 crore com­bined en­tity. The boards of both com­pa­nies, which met here to­day, fixed the share swap ra­tio at 139:10, which means IDFC Bank will is­sue 139 shares for ev­ery 10 shares of Cap­i­tal First. On Fri­day, the share price of IDFC Bank closed at Rs 67.65, down 1.31 per cent, while that of Cap­i­tal First at Rs 835.90, up 0.05 per cent, on the BSE.

The bank, in a state­ment said, the merger is pur­suant to IDFC Bank’s stated strat­egy of re­tail­is­ing its busi­ness to com­plete their trans­for­ma­tion from a ded­i­cated in­fra­struc­ture fi­nancier to a well-di­ver­si­fied univer­sal bank, and is also in line with Cap­i­tal First’s stated in­ten­tion and strat­egy to con­vert it­self into an univer­sal bank.

“We be­lieve this merger will be trans­for­ma­tional for IDFC Bank. It will bring two tech-savvy, cul­tur­ally aligned plat­forms to come to­gether to cre­ate a di­ver­si­fied and fast grow­ing univer­sal bank with a na­tional foot­print, in a man­ner that will be value ac­cre­tive for all share­hold­ers,” IDFC Bank Man­ag­ing Di­rec­tor and CEO, Ra­jiv Lall said.

Com­ment­ing on the merger, Cap­i­tal First Chair­man and Man­ag­ing Di­rec­tor, V Vaidyanathan said: “We are ex­cited about this merger be­cause IDFC Bank pro­vides a per­fect plat­form for con­tin­ued growth of the com­bined fran­chise, sup­ported by low-cost fund­ing.”

The merger is likely to be com­pleted in the next two-three quar­ters. Vaidyanathan will suc­ceed Lall as Man­ag­ing Di­rec­tor and CEO of the com­bined en­tity upon the com­ple­tion of the merger, which is sub­ject to reg­u­la­tory ap­provals. Lall will step into the role of Non-Ex­ec­u­tive Chair­man of IDFC Bank and guide the tran­si­tion process. He will re­place Veena Mankar as Non-Ex­ec­u­tive Chair­man, but the lat­ter will re­main on the board. Cap­i­tal First has a cus­tomer base of 3 mil­lion and a distri­bu­tion net­work in 228 lo­ca­tions across the coun­try. Its gross and net NPA stood at 1.63 per cent and 1 per cent, re­spec­tively as on Septem­ber 2017. Post­merger, the com­bined en­tity will have an AUM of Rs 88,000 crore.

The new en­tity will have a distri­bu­tion net­work com­pris­ing 194 branches, 353 ded­i­cated bank­ing cor­re­spon­dent out­lets, over 9,100 mi­cro ATM points, and will be serv­ing more than 5 mil­lion cus­tomers.

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