The combination of IDFC Limited and IDFC First Bank was given board approval on Monday. The share exchange ratio has also been set for this.
For every 100 shares they own in IDFC Limited, shareholders will receive 155 shares in the bank. The value of IDFC First Bank shares will increase by 4.9% following the merger.
In the information provided to the stock market on Monday, IDFC First Bank stated that this was being done to simplify the corporate structures of IDFC FHCL, IDFC Limited, and IDFC First Bank. According to the bank, this will also simplify following the rules. This merger ranks second in size in India's financial industry after the union of HDFC Bank and HDFC Bank.
What a big deal!
In this regard, IDFC First Bank has made no disclosures. However, if we consider the share prices of both businesses through Monday's market closing, this purchase will be valued at roughly Rs 71767 crore.
Pending approval
The Reserve Bank of India (RBI), the Competition Commission of India (CCI), SEBI, NCLT, and all other regulatory bodies, including stock exchanges, have not yet approved this merger. In addition, it still needs to receive the shareholders' approval of both firms.
Financial data of companies
The assets owned by IDFC First Bank after the fiscal year 2022–2023 totaled Rs. 2.4 lakh crore. It had a revenue of Rs 27,194 crore. The bank reached a net profit of Rs. 2437 crore in FY23. The assets of IDFC Limited, on the other hand, were Rs 9570 crore as of the end of the previous financial year, and its turnover was Rs 2076 crore.
What will be the effect on shareholders?
On the NSE, shares of IDFC First Bank completed the day on Monday at Rs 81.70, up 2.90 percent. IDFC Limited finished at roughly Rs 110 with a 7% gain simultaneously. If this merger takes place, the investors in IDFC Limited will receive more shares and profit greatly from the increase in the value of IDFC First's stock.