IDFC First Bank Shareholders And Debenture Holders Approve Merger Proposal At NCLT Meeting

IDFC First Bank has announced that its shareholders and non-convertible debenture (NCD) holders have approved the merger proposal with its parent company, IDFC Limited. This development came during a meeting convened by the National Company Law Tribunal (NCLT) on May 17, 2024.

The proposal, formally known as the composite scheme of amalgamation, was presented to the shareholders and NCD holders of IDFC First Bank. The scheme involves a two-step merger process where IDFC Financial Holding Company Limited (IDFC FHCL) will first merge with IDFC Limited, followed by the amalgamation of IDFC Limited into IDFC First Bank.

During the NCLT-convened meeting, which was presided over by Mr. Varadharajan, the Chairperson appointed by the NCLT, the quorum was initially not met. Consequently, the meeting was adjourned and reconvened half an hour later, at which point the requisite quorum was present.

According to the regulatory filings by IDFC First Bank, the resolution was passed by 99.95% of the equity shareholders, representing more than three-fourths in value of the equity shareholders who participated through remote e-voting and e-voting during the meeting. Furthermore, the proposal was supported by 99.99% of the NCD holders.

IDFC Limited started as an infrastructure lender in the private sector in 1997. The company received in-principle approval from the Reserve Bank of India (RBI) to set up a bank in April 2014 and subsequently launched IDFC Bank in October 2015. In December 2018, IDFC Bank merged with Capital First, a non-bank financial company focused on consumer and MSME (micro, small, and medium enterprises) lending, to form IDFC First Bank.

The proposed merger aims to consolidate IDFC FHCL, IDFC Limited, and IDFC First Bank into a single entity, thereby simplifying the corporate structure. Additionally, the merger is anticipated to increase the book value per share of IDFC First Bank by 4.9%, based on the audited financials as of March 31, 2023.

Following the approval from shareholders and NCD holders, the next step involves obtaining the final nod from the NCLT, which is anticipated soon. The RBI has already issued a no-objection certificate (NOC) for the merger, which was a critical regulatory requirement for the process.

Under the terms of the merger, IDFC shareholders will receive 155 shares of IDFC First Bank for every 100 shares they hold in IDFC. Both stocks have a face value of Rs 10 each.

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