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IDFC Bank to buy Warburg-backed Capital First in $1.5 bln stock deal

Reuters  |  MUMBAI 

By and Suvashree Choudhury

(Reuters) - Ltd, one of India's two newest banks, will acquire non-financial firm Ltd in share swap deal valued at about $1.5 billion as it looks to boost its

According to terms of the deal announced on Saturday, shareholders in will receive 139 shares of the for every 10 shares held. The deal is conditional on central and other regulatory approvals.

The deal values - owned more than third by firm - at 938.25 rupees share based on the two companies' Friday closing price and giving the company market value of 92.78 billion rupees ($1.46 billion), calculations showed.

That is premium to First's Friday closing price of 837.50 rupees, or equal to market capitalisation of about 83 billion rupees, according to data.

The deal is "pursuant to Bank's stated strategy of 'retailising' its business to complete their transformation from to well-diversified universal bank," the two sides said in joint statement.

First's founder and will become of the combined entity, the statement said.

- which was spun off from Ltd in 2015 - is currently heavily reliant on wholesale lending.

At time when surge in bad loans and weak economic growth have crimped lending to big industries, banks and financial institutions are growing the faster.

First, which also counts state investor GIC among its major investors, will bring in loan book of almost 230 billion rupees as of Sept. 30, three million customers and distribution network spanning 228 locations across the country.

and its parent Ltd last year announced talks to acquire some of Shriram Group's financial services businesses but the deal fell through due to disagreement on share swap ratio.

($1 = 63.6000 Indian rupees)

(Reporting by Suvashree Dey Choudhury and Devidutta Tripathy; Editing by Shri Navaratnam)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, January 13 2018. 14:43 IST