RBI Approves Capital First’s Merger With IDFC Bank
The central bank has conveyed its ‘no objection’ for the share-swap deal.
The Reserve Bank of India has given its approval for Capital First Ltd.’s merger with IDFC Bank today.
The central bank conveyed its ‘no objection’ to the deal in a letter dated June 4, the Mumbai-based non-banking financial company said in a statement to the exchanges. The merger, announced in January, will create a lender with a portfolio diversified across large corporate lending, small and medium enterprise loans and retail credit.
Under the current scheme of arrangement, IDFC Ltd.’s stake in the merged entity will stand at 38 percent, which is under the RBI mandated 40 percent level, V Vaidyanathan, Chairman and Managing Director of Capital First told BloombergQuint.
“IDFC Ltd. will have to buy close to 2 percent, either through market operations or any other route,” he said. “We're not raising any fresh equity so I guess they'll have to buy.”
Vaidyanathan will take over as the chief executive officer of the combined entity while IDFC Bank’s current CEO Rajiv Lall will be the chairman.
Post-merger, the combined entity of IDFC Bank and Capital First will have an asset under management of Rs 88,000 crore, the bank had said in a statement after the deal announcement. The merged entity will have a distribution network comprising 194 branches (as per branch count of December 2017 of both entities), 353 dedicated banking correspondent outlets and over 9,100 micro ATM points.
The merger is yet to receive approvals from shareholders, the National Company Law Tribunal and creditors of the companies involved, the statement added.