IDFC Bank, Capital First announce merger
The Board of the IDFC Bank has approved a merger with non-banking financial company (NBFC) Capital First, with a share swap ratio of 139:10.
According to an ET report, this will lead to the creation of a larger institution with about Rs 1.4 lakh crore of assets and nearly 64 lakh customers. The union will also act as a springboard for IDFC Bank looking to quickly grow its assets, said two people familiar with the matter.
The merger will create a financial company with a market value of at least Rs 31,000 crore that will have businesses across all segments.
IDFC’s CFO Bipin Gemanio resigned, effective immediately.
IDFC Bank scrapped a deal to merge with Shriram City Union last year as the two could not arrive at a consensus on valuations.
The deal could be a success for IDFC Bank chief Rajiv Lall who managed to get a bank licence in 2014. For V Vaidyanathan, the chairman and managing director of Capital First, it is an opportunity to build a fullfledged bank after having built the NBFC with capital backing from Warburg Pincus.
The strength of Capital First, in which Warburg Pincus owns 36%, lies in lending to small and medium enterprises. It has built loan assets of Rs 22,974 crore as on September 30, 2017, with 93% of its loan assets in the consumer and MSME financing segments which yield the highest return among all segments of borrowers. The company reported profit after tax of Rs 78.3 crore in the second quarter of the financial year.
Let’s block ads! (Why?)
Via:: Economic Times – Stocks