IDFC Bank and Capital First announced a merger between the two on Saturday to form a combined entity with assets under management of Rs 88,000 crore, branch network of 194 and customer base of over 5 million. As per the agreement, IDFC Bank will issue 139 shares for every 10 shares of Capital First.
The boards of directors of IDFC Bank and Capital First at their respective meetings held today approved a merger of Capital First with IDFC Bank.
V Vaidyanathan, current Chairman and MD of Capital First, will succeed Rajiv Lall as MD and CEO of the combined entity upon completion of the merger and necessary regulatory approvals while Lall will step into the role of non-executive Chairman of IDFC Bank and guide the transition process. He will replace Ms. Veena Mankar who will remain on the Board.
Warburg Pincus owns 36% in Capital First which is primarily into lending to small and medium enterprises. The market capitalization of Capital First ten-fold since the buyout in March 2012 from Rs. 780 crores to over Rs. 8000 crores.
This announcement is pursuant to IDFC Bank’s stated strategy of “retailising” its business to complete their transformation from a dedicated infrastructure financier to a well-diversified universal bank, and in line with Capital First’s stated intention and strategy to convert to a universal bank.
Capital First brings with it a retail lending franchise with a loan book of Rs 22,974 crores as on September 2017, a live customer base of three million customers; and a distribution network in 228 locations across the country. Post-merger, the combined entity of IDFC Bank and Capital First will have an AUM of Rs 88,000 crores; PAT of Rs 1268 crores (FY 17); and a distribution network comprising 194 branches (as per branch count of December 2017 of both entities), 353 dedicated BC outlets and over 9,100 micro ATM points, serving more than five million customers across the country.