IDFC First Bank Merger with IDFC Ltd Gets Shareholder Approval

IDFC First Bank shareholders have given their nod to the merger with IDFC Limited, marking a significant milestone in the consolidation process, with promising prospects ahead

IDFC First Bank Shareholders Approve Merger:

Approval of Merger Scheme:

• The merger plan between IDFC Limited and the firm has been accepted by the shareholders of IDFC First Bank.

• The resolution was passed by the requisite majority of equity shareholders representing more than three-fourths in value of the equity shareholders.

NCLT Meeting:

• The composite plan of merger for IDFC FIRST Bank was brought before the National Company Law Tribunal (NCLT) for consideration and approval on May 17.

• The focus was on the amalgamation of IDFC Financial Holding Company into IDFC Limited and IDFC Limited into IDFC First Bank.

Approval by NCD Holders:

• The amalgamation scheme received approval from a majority of Non-Convertible Debenture (NCD) Holders.

• 99.99% of NCD Holders, representing more than three-fourths in value, voted in favor through remote e-voting and e-voting during the meeting.

RBI Approval and Board Resolutions:

RBI Approval for Reverse Merger:

• In December 2023, the Reserve Bank of India (RBI) approved the reverse merger of IDFC Ltd with its banking subsidiary IDFC First Bank.

Board Approvals:

• The boards of IDFC Financial Holding Co. Ltd, IDFC Ltd, and IDFC First Bank had approved the merger in July 2024.

Details of Reverse Merger Scheme:

Shareholder Benefits:

• Under the proposed reverse merger scheme, IDFC shareholders will receive 155 shares for every 100 shares held in the bank.

• Both IDFC Ltd and IDFC First Bank shares have a face value of ₹10 each.

Stock Market Impact:

Trading Activity:

• As of 11:55 am, IDFC First Bank shares were trading 0.30 higher at ₹77.47 apiece on the BSE.

• The market is responding positively to the news of the merger approval.

Summary and Market Response:

Approval Milestone:

• The approval of the merger scheme marks a significant milestone in the consolidation process of IDFC Ltd and IDFC First Bank.

• Shareholders and NCD Holders have shown overwhelming support for the amalgamation.

Future Prospects:

• The proposed reverse merger is expected to streamline operations and enhance synergies between IDFC Ltd and IDFC First Bank.

• It also positions the combined entity for potential growth and expansion in the banking sector.

Market Confidence:

• The positive trading activity of IDFC First Bank shares reflects market confidence in the merger and its potential benefits for shareholders.

Conclusion:

IDFC First Bank's successful merger approval by shareholders and NCLT, along with RBI's prior consent, signals a promising future for the combined entity. The proposed reverse merger scheme aims to optimize shareholder value and strengthen the position of the bank in the competitive banking landscape.