(Eds: Adds details)Mumbai, Jan 13 (PTI) One of the youngest privatelenders IDFC Bank and Warburg Pincus-backed non-bankingfinancial company Capital First today announced a merger in anall-stock deal, creating a Rs 88,000-crore combined entity.
The boards of both companies, which met here today,fixed the share swap ratio at 139:10, which means IDFC Bankwill issue 139 shares for every 10 shares of Capital First.
On Friday, the share price of IDFC Bank closed at Rs67.65, down 1.31 per cent, while that of Capital First at Rs835.90, up 0.05 per cent, on the BSE.
The bank, in a statement said, the merger is pursuantto IDFC Bank's stated strategy of retailising its business tocomplete their transformation from a dedicated infrastructurefinancier to a well-diversified universal bank, and is also inline with Capital First's stated intention and strategy toconvert itself into a universal bank.
"We believe this merger will be transformational forIDFC Bank. It will bring two tech savvy, culturally alignedplatforms to come together to create a diversified and fastgrowing universal bank with a national footprint, in a mannerthat will be value accretive for all shareholders," IDFC Bankmanaging director and CEO Rajiv Lall said.
Commenting on the merger, Capital First chairman andmanaging director V Vaidyanathan said, "We are excited aboutthis merger because IDFC Bank provides a perfect platform forcontinued growth of the combined franchise, supported by low-cost funding."The merger is likely to be completed in the next two-three quarters.
Vaidyanathan will succeed Lall as managing directorand CEO of the combined entity upon the completion of themerger, which is subject to regulatory approvals.
Lall will step into the role of non-executive chairmanof IDFC Bank and guide the transition process. He will replaceVeena Mankar as non-executive chairman, but the latter willremain on the board.
Capital First has a customer base of 3 million and adistribution network in 228 locations across the country. It'sgross and net NPA stood at 1.63 per cent and 1 per cent,respectively as on September 2017.
Post-merger, the combined entity will have an AUM ofRs 88,000 crore.
The new entity will have a distribution networkcomprising 194 branches, 353 dedicated banking correspondentoutlets, over 9,100 micro ATM points, and will be serving morethan 5 million customers.
Currently, private equity firm Warburg Pincus holds35.97 per cent in Capital First. The Singaporean sovereignwealth fund GIC owns 14 per cent, while Vaidyanathan holds10.5 per cent in the company.
After the merger, Warburg Pincus's stake will comedown to a little over 10 per cent, GIC's stake will slip to 5per cent and Vaidyanathan's to 3.4 per cent.
Infrastructure lender IDFC, which entered the bankingspace in 2015, has been on the lookout to grow its retailportfolio.
Last July, IDFC Bank had entered into an agreementwith Piramal Group-backed financial services major ShriramGroup for a merger.
The deal was later called off in October as both theentities could not reach a common ground on the share swapratio. PTI HV BENRSY.
This is unedited, unformatted feed from the Press Trust of India wire.