In a share swap deal worth $1.5 billion, the IDFC bank, one of the top newest banks in the Indian market, will be incorporating non-bank financial firm Capital First Ltd. to hike the retail lending activities. As per the terms announced on Saturday, the Capital First shareholders will be receiving 139 shares from the bank for every 10 shares that are held. The deal is absolutely conditional on the central bank and other miscellaneous regulatory approvals.
The deal value of Capital First is Rs. 938.25 per share based on the closing balance of both the companies, yielding a market value of Rs. 9,278 crore or $1.46 billion, as per the calculation of the Reuters calculator.
As per the Thomson Reuters data, the premium of the Capital First closing data is Rs. 837.50, which is equal to the market capitalization of Rs. 8,300 crore.
Both the companies stated in a joint statement that the deal is about the compatibility of IDFC bank’s strategy of retailizing the business in order to accomplish the transformation from the dedicated infrastructure financier into a well-diversified universal bank.
The combined entity will be witnessing some old faces in a new chair so the expectation for the latest endeavor is quite high. The founder of Capital First, V Vidyanathan will be the chief executive of the conjugated body.
IDFC bank is also highly reliant on wholesale lending and has converted from the initial endeavor of infrastructure financier.
The financial institutions and banks are thriving on the bad loans and feeble economic growth. This scenario is leading to quicker and less risky retail loans.
Capital First also has Singapore state investor GIC as its prime investors and will be introducing a loan book of 230 billion rupees, 3 million customers, and a distribution networking in 228 locations across the country.