- Date : 04/07/2023
- Read: 3 mins
IDFC and IDFC FIRST Bank have announced their upcoming merger which would unite the business of both entities. The share exchange ratio is set at 155:100.
- The Board of IDFC FIRST Bank has greenlighted the proposed merger with IDFC
- The companies that would merge together are IDFC FIRST Bank, IDFC Limited and IDFC FHCL
- Against 100 shares of IDFC, shareholders would get 155 shares of IDFC FIRST Bank
- The merger is expected to boost the financial performance of the bank and also ensure streamlined operations
Looks like mergers are the latest buzzword in the financial world as major mergers are happening all at once. Just when one of the biggest mergers between HDFC Bank and HDFC Limited was finalised recently, another merger has become the talk of the market.
In what seems to be another big merger, IDFC FIRST Bank is joining operations with IDFC. Three major entities are coming together in this merger which includes IDFC FIRST Bank, IDFC Limited and IDFC HFCL.
The share exchange ratio of the proposed merger is set at 155:100. This means that for every 100 IDFC shares held, shareholders would receive 155 shares of IDFC FIRST Bank.
Talking about the merger, IDFC FIRST Bank stated that it would be beneficial for all the entities involved. Here’s what the bank stated about the proposed merger –
- The standalone book value of IDFC FIRST Bank is expected to increase by 4.9%
- The balance sheet would also jump 20% to 25% in the nearest future after the merger
- The merger aimed to simplify the corporate structure of the merging entities and also make adhering to regulatory compliances easy
- The existing shareholding of promoters would be eliminated once the merger comes through
Though the merger has been accepted and approved by all the participating entities, it is awaiting approval from the regulatory bodies. Only after the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and other authorised regulatory bodies give a go-ahead will the merger actualise.
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The bottom line
If you are an existing shareholder of IDFC FIRST Bank or IDFC Limited, know how the merger would affect your shareholding pattern. Also, see how the merger affects the financial metrics of IDFC FIRST Bank so that you can get better returns on your investments.