IDFC, IDFC First Bank Merger Gains Approval From Debt & Equity Investors
NCLT held a meeting on 17 May to review and sanction the amalgamation scheme for IDFC First Bank, as stated in a regulatory disclosure by the bank
Shareholders and holders of non-convertible debentures (NCDs) of IDFC First Bank have endorsed a proposition to merge its parent company, IDFC, with the bank. The National Company Law Tribunal (NCLT) held a meeting on 17 May, conducted via video conferencing and other audio-visual means, to review and sanction the amalgamation scheme for IDFC First Bank, as stated in a regulatory disclosure by the bank.
The bank's board submitted the outcome of the amalgamation proposal voting to the NCLT. According to the lender, the resolution to approve the scheme received overwhelming support, with 99.95 per cent of equity shareholders, representing over three-fourths in value of the bank's equity shareholders, voting in favor through remote e-voting and e-voting during the meeting, in compliance with Sections 230-232 of the Companies Act, 2013.
In a separate announcement, it was reported that the proposal received approval from 99.99 per cent of the NCD holders. As part of the comprehensive amalgamation scheme, IDFC FHCL would be merged with IDFC, followed by the merger of IDFC into IDFC First Bank.
Under the proposed reverse merger arrangement, an IDFC shareholder would receive 155 shares for every 100 shares held in the bank, both with a face value of Rs 10 each. Originally an infrastructure lender in the private sector, IDFC ventured into banking by launching its subsidiary, IDFC Bank, in 2015, following the lead of major peers like ICICI and IDBI. However, it struggled to establish a significant presence.
Similar to HDFC Bank, the merged entity, IDFC First Bank, will have no promoter entity and will be wholly owned by institutional and public shareholders. IDFC began its journey as an infrastructure lender in 1997. After obtaining in-principle approval from the RBI to establish a bank in April 2014, it launched IDFC Bank in October 2015, during the on-tap licensing period, subsequently transferring loans and liabilities from IDFC to the bank.
In December 2018, IDFC acquired Capital First, a non-bank focused on consumer and MSME sectors since 2012, and rebranded it as IDFC First Bank, transforming into a full-service universal bank.
