IDFC Bank, Capital First shares rally up to 8% as RBI approves merger

IDFC Bank and Capital First share prices gained up to 8 per cent on Wednesday after IDFC Bank said it has received RBI's approval for merger of Capital First, Capital First Home Finance and Capital First Securities with the company. 

Reacting to the news, IDFC Bank gained as much as 8 per cent to Rs 41.50, while Capital First rallied 6.75 per cent to Rs 569 on the BSE. 

"The Reserve Bank of India (RBI) has, via its letter dated June 4, 2018, conveyed its 'No Objection' for the voluntary amalgamation of Capital First Ltd, Capital First Home Finance Ltd and Capital First Securities Ltd with IDFC Bank," IDFC Bank said in a regulatory filing.

Earlier in January, the company said its board of directors has approved amalgamation of the three entities with IDFC Bank.

The amalgamation is subject to the receipt of approval from the respective shareholders and creditors of the companies, the National Company Law Tribunal, and other statutory and regulatory approvals, it added.

Capital First, a Warburg Pincus backed non-banking financial company and IDFC Bank are set to create a Rs 88,000-crore combined entity with this merger in an all-stock deal.

The share swap ratio for the merger is fixed at 139:10, meaning IDFC Bank will issue 139 shares for every 10 shares of Capital First.

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Capital First has a customer base of 3 million and a distribution network in 228 locations across the country.

Its gross 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 assets under management (AUM) of Rs 88,000 crore.

The new entity will have a distribution network comprising 194 branches, 353 dedicated banking correspondent outlets, over 9,100 micro ATM points, and will be serving more than 5 million customers.