IDFC First Bank of India falls, IDFC hits record merger approval

BENGALURU/MUMBAI, July 4 (Reuters) – Shares in private lender IDFC First Bank (IDFB.NS) they fell as much as 6% on Tuesday, while IDFC’s rose 6% to record highs after the companies approved a reverse merger aimed at simplifying their corporate structure and making it easier to comply with regulations.

As part of the deal, on the heels of a similar merger between HDFC Ltd and HDFC Bank, shareholders of non-bank lender IDFC will get 155 IDFC First Bank shares for every set of 100 shares they currently own in the former.

That values ​​it at Rs 127.02 per share, at a 16.3% premium over the last IDFC close.

IDFC held a 39.93% stake in the banking arm through IDFC Financial Holdings as of June 30.

The Reserve Bank of India in 2021 allowed IDFC to exit IDFC First Bank when a five-year share-lock period ended in 2020, paving the way for the reverse merger.

First established in 2014 as IDFC Bank, IDFC First Bank was later formed when the lender and Capital First merged in 2018.

“This was a long-pending merger that got bogged down due to IDFC’s complex legal structure and therefore took time to wind down,” said Asutosh Mishra, an analyst at national brokerage Ashika Stock Broking.

IDFC First Bank’s standalone book value would rise 4.9% as a result of the deal, the lender said.

IDFC First Bank had a loan portfolio of Rs 1.61 trillion and a balance sheet of Rs 2.4 trillion as of March 31.

The HDFC-HDFC Bank merger, which created a $40 billion financial fund giant it may have been a catalyst to boost approval, said Kranthi Bathini, equity strategist at WealthMills Securities.

($1 = 81.9550 Indian rupees)

Reporting by Varun Vyas in Bangalore; Edited by Nivedita Bhattacharjee

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