Capital First merger with IDFC Bank gets NHB nod

The merger of Capital First with IDFC Bank is more or less confirmed with the regulator National Housing Bank (NHB) giving its approval a couple of days back.

According to a press note by Capital First, the NHB approved the merger through a letter dated February 19, 2018, wherein it pointed out it had no objection to the aforesaid amalgamation subject to its compliance with the applicable provisions of relevant acts, rules, regulations, etc in the matter.

Earlier in January, Capital First had informed the decision of the board of directors approving amalgamation of the company, Capital First Home Finance Limited, and Capital First Securities Limited (collectively, the ‘Amalgamating Companies’) with IDFC Bank Limited.

The merger is yet to get approval from the Reserve Bank of India and other statutory and regulatory approvals.

The US based PE firm Warburg Pincus backed non-banking financial company and one of the youngest private lenders IDFC Bank with this merger in an all-stock deal, are set to create a Rs 880 billion combined entity.

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. The merger is likely to be completed in the next two- three quarters.

Capital First has a customer base of 3 million and a distribution network in 228 locations across the country. It’s 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 an AUM of Rs 880 billion.

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.

Currently, private equity firm Warburg Pincus holds 35.97 per cent in Capital First. Infrastructure lender IDFC, which entered the banking space in 2015, has been on the lookout to grow its retail portfolio.