IDFC FIRST Bank begins process for 3-way merger; stock ends flat

The merger would be subject to the shareholders, creditors, statutory and regulatory approvals of the respective entities

Private lender IDFC FIRST Bank has set in motion the process of merging IDFC Ltd and IDFC Financial Holding Company with itself.

Both entities form part of the bank promoter group. The bank, however, did not elaborate on the timeline for the merger. The board of directors of the bank at its meeting held on Thursday considered the merger proposal. It was, in principle, in favour of it, it informed the BSE.

The boards of IDFC and IDFC Financial Holding Company too have given the nod for it.

IDFC Financial Holding Company hold 36.52 per cent in the bank as of September 2021. IDFC holds 100 per cent stake in IDFC Financial Holding.

The IDFC FIRST Bank stock closed flat at Rs 47.45 per share. The merger must have the approval of the shareholders of the companies concerned, their creditors, and the statutory and regulatory authorities.

The board has formed a panel called “Capital Raise and Corporate Restructuring Committee” to work on the terms of the merger. Its remit will be areas like finalising the scheme, valuation, and hiring advisors.

The details will be provided as and when the scheme of the merger is finalised, it added.

IDFC, as promoter, was required to hold 40 per cent for five years from the date of the bank’s commencement of operations. This five-year period ended on September 30 last year.

On July 20 this year, the Reserve Bank of India said IDFC could now exit as promoter of IDFC FIRST Bank.