IDFC First Bank completes IDFC Ltd Merger; effective from October 2024

New Delhi: The IDFC First bank in a statement on Friday announced the completion of merger of IDFC Limited with the bank. The announcement has been made after the approvals of the all requisite shareholders. 

IDFC Limited Merger

The bank states that the merger will be effective from 1st October, 2024. However the shareholders of IDFC Limited will receive equity shares of the Bank in accordance with share exchange ratio decided by the Board in its meeting held on July 03, 2023, i.e., 155 equity shares (credited as fully paidup) of face value of Rs 10/- each of IDFC FIRST Bank for every 100 fully paid-up equity shares of face value of Rs 10/- each of IDFC Limited.

The board outcome meeting mention that “Record Date arrived in consultation with IDFC Limited, for determining the shareholders of IDFC Limited who shall be issued and allotted the shares of IDFC FIRST Bank under the Scheme will be Thursday, October 10, 2024.”

“The shareholding structure will be like other leading institutional Indian private sector banks with no promoter holding. The bank will continue to be professionally managed institution,” it said.

Moreover as a part of the merger, about Rs 600 crore of cash and cash equivalents will flow to the bank.

According to the BSE filling these are the following advantages of the amalgamation for IDFC FIRST Bank:

a. Simplified Corporate Structure: Post the amalgamation, there will be a simplified corporate structure at the Bank with no holding company. 

b. Simplified shareholding Structure: The shareholding structure will be like other leading institutional private sector banks with no promoter holding. The Bank will continue to be professionally managed institution. 

c. Cash and cash equivalents: As part of the merger, about Rs 600 crores of cash and cash equivalents will flow to the Bank.

d. Reduction of outstanding paid-up shares: 2,64,64,38,348 equity shares held by IDFC Limited in IDFC FIRST Bank will stand cancelled and in lieu of the same, IDFC FIRST Bank will issue ~2,47,99,75,876 new equity shares to the shareholders of IDFC Limited as per the agreed swap ratio. Hence there will be a reduction of ~16,64,62,472 equity shares (A minus B) in the paid-up share capital of the Bank, and the paid-up capital of the Bank will stand reduced from 7,48,27,31,991 shares to 7,31,62,69,519 equity shares post the transaction. 

e. Eligible to pay dividends: Due to losses posted by the Bank in its early years largely due to legacy infrastructure and corporate loan accounts and due to write-off of goodwill due to prior transactions, the Bank had accumulated losses. This was restricting the Bank in its ability to pay dividends to shareholders. Such accumulated losses will be set off against the Securities premium Account of the Bank as part of the merger scheme. This would now enable the Bank to explore opportunities to pay dividend in future. 

f. Unification & streamlining of the regulatory compliances. 

g. India is a fast-growing country, and such growth will open up immense opportunities over the next couple of decades. With a simplified shareholding and corporate structure, and strong capabilities and brand built at the Bank, and a complete range of services of a Universal Bank, the Bank is well placed to grow with the enormous opportunities India offers.