One of the youngest private lenders IDFC Bank and Warburg Pincus-backed non-banking financial company Capital First today announced a merger in an all-stock deal, creating a Rs 88,000-crore combined entity.
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 a 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.
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.
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.
The deal was later called off in October as both the entities could not reach a common ground on the share swap ratio.
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