The Infrastructure Development Finance Company (IDFC) has achieved a significant milestone in its merger process with IDFC First Bank by receiving approval from the Competition Commission of India (CCI). The CCI’s communication on October 17, 2023, stated that it has considered and approved the merger under the Green Channel Route, as indicated by a regulatory filing.
The merger proposal between the development finance institution, IDFC, and the private lender, IDFC First Bank, had already secured approval from the boards of directors of both entities on July 3.
However, it is important to note that the merger’s realization is contingent on obtaining the necessary approvals from various statutory and regulatory bodies, including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the National Company Law Tribunal (NCLT).
In addition to regulatory bodies, stock exchanges’ approval and consent from the respective shareholders and creditors of IDFC and IDFC are essential steps in the merger process.
As of June 30, 2023, IDFC held a stake of 30.93 percent in IDFC First Bank through its non-financial holding company. Both entities have set a target to complete the merger during this fiscal year, with the agreed-upon deal ratio being “155:100.”
According to the proposed merger terms, IDFC shareholders will receive 155 shares of IDFC First Bank for every 100 shares held in the former. IDFC First Bank stated in a regulatory filing on July 3, “The share exchange ratio for the amalgamation of IDFC Limited with IDFC First Bank shall be 155 equity shares of face value of ₹10/- each fully paid-up of IDFC First Bank for every 100 equity shares of face value of ₹10/- each fully paid-up of IDFC Ltd.”
This merger decision takes place in the context of the Housing Development Finance Corporation (HDFC) successfully completing its merger with its banking arm, HDFC Bank, on July 1.
As of the trading session on October 17, IDFC First Bank’s shares closed at ₹91.63, reflecting a 0.79 percent increase compared to the previous day’s closing price.
The merger of IDFC and IDFC First Bank has taken a significant step forward with the Competition Commission of India (CCI) granting its approval. However, the merger’s actualization remains subject to the requisite approvals from various regulatory and statutory bodies, including SEBI, RBI, and NCLT. The merger’s success will also depend on securing approval from stock exchanges and receiving consent from the shareholders and creditors of both organizations.
IDFC, holding a 30.93 percent stake in IDFC Bank, has a target to complete the merger within the current fiscal year, with the deal ratio set at “155:100.” This ratio entails that IDFC shareholders will receive 155 shares of IDFC First Bank for every 100 shares of IDFC. The merger’s progression comes on the heels of HDFC’s merger with HDFC Bank.
IDFC First Bank’s shares exhibited positive momentum in the trading session on October 17, closing at ₹91.63, marking a 0.79 percent increase from the previous day’s closing price.
