merges with Capital First: Here’s why

In all-share deal, IDFC Bank and Warburg Pincus-backed Capital First announced that they have decided to merge.

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In all-share deal, and announced that they have decided to merge. V Vaidyanathan, founder and Executive Chairman of will become the MD and CEO of the merged entity. Rajiv Lall, MD and CEO of IDFC Bank, will become non-executive chairman of IDFC Bank, and guide the transition process, which may take six to nine months to complete. Capital First specialises in financing small entrepreneurs and consumers and has a good presence in the small and medium enterprises space.

As per merger agreement, IDFC Bank would be issuing 139 shares for every 10 shares of Capital First. The deal will go through shareholders’ nod and other regulatory approvals. In an interview, Vaidyanathan said that now the combined entity would be able to offer more products to customers.

According to experts, the merger is in line with IDFC Bank’s aim for mass retailisation and Capital First’s intention to become a bank. After the merger, the combined entity would have assets under management of Rs 880 billion and would serve more than five million customers across the country. The profit after tax of the merged entity would have been Rs 12.7 billion at end of fiscal 2017, and a distribution network of 194 branches (according to branch count of December 2017 of both entities), 353 dedicated business correspondent outlets, and over 9,100 micro ATM points, reported Business Standard.

Before founding Capital First in 2012, Vaidyanathan was the executive director and retail head of ICICI Bank. He aggressively building up the ICICI Bank retail portfolio to be the largest in the country with $35 billion equivalent, and 1,400 branches across mortgages, auto loans, commercial vehicles, and other products.

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