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

Press Trust of India  |  Mumbai 

One of the youngest private lenders and Warburg Pincus-backed non- financial company Capital First today announced a in an all-stock deal, creating a Rs 88,000-crore combined entity.

The boards of both companies, which here today, fixed the share swap ratio at 139:10, which means will issue 139 for every 10 of Capital First.

On Friday, the share price of 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

The bank, in a statement said, the 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 a

"We believe this will be transformational for It will bring two tech savvy, culturally aligned platforms to come together to create a diversified and fast growing with a national footprint, in a manner that will be value accretive for all shareholders," said.

Commenting on the merger, Capital First chairman and managing said, "We are excited about this merger because 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 of IDFC Bank and guide the transition process. He will replace 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. It's gross and net NPA stood at 1.63 per cent and 1 per cent, respectively as on September 2017.

Post-merger, 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 outlets, over 9,100 micro points, and will be serving more than 5 million customers.

Currently, firm holds 35.97 per cent in Capital First. The Singaporean sovereign wealth fund GIC owns 14 per cent, while Vaidyanathan holds 10.5 per cent in the company.

After the merger, Warburg Pincus's stake will come down to a little over 10 per cent, GIC's stake will slip to 5 per cent and Vaidyanathan's to 3.4 per cent.

IDFC, which entered the space in 2015, has been on the lookout to grow its retail portfolio.

Last July, IDFC Bank had entered into an agreement with Piramal Group-backed Shriram Group for a merger.

The deal was later called off in October as both the entities could not reach a common ground on the share swap ratio.

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

First Published: Sat, January 13 2018. 19:15 IST