| Log in
Photo Credit: Shah Junaid/VCCircle

IDFC Bank, Warburg-backed Capital First to merge in $1.5 bn deal

13 January, 2018

IDFC Bank Ltd, one of India’s two newest banks, will acquire non-bank financial firm Capital First Ltd in a share swap deal valued at about $1.5 billion as it looks to boost its retail lending activities.

According to terms of the deal announced on Saturday, shareholders in Capital First will receive 139 shares of the bank for every 10 shares held. The deal is conditional on central bank and other regulatory approvals.

The deal values Capital First – owned more than a third by private equity firm Warburg Pincus – at 938.25 rupees a share based on the two companies’ Friday closing price and giving the company a market value of 92.78 billion rupees ($1.46 billion), Reuters calculations showed.

That is a premium to Capital First’s Friday closing price of 837.50 rupees, or equal to a market capitalisation of about 83 billion rupees, according to Thomson Reuters data.

The deal 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,” the two sides said in a joint statement.

Capital First’s founder and chairman V. Vaidyanathan will become chief executive of the combined entity, the statement said.

IDFC Bank – which was spun off from infrastructure financier IDFC Ltd in 2015 – is currently heavily reliant on wholesale lending.

At a time when a surge in bad loans and weak economic growth have crimped lending to big industries, banks and financial institutions are growing the less-riskier retail loans faster.

Capital First, which also counts Singapore state investor GIC among its major investors, will bring in a loan book of almost 230 billion rupees as of Sept. 30, three million customers and a distribution network spanning 228 locations across the country.

IDFC Bank and its parent IDFC Ltd last year announced talks to acquire some of Shriram Group’s financial services businesses but the deal fell through due to disagreement on a share swap ratio.

Like this report? Sign up for our daily newsletter to get our top reports.


Leave Your Comment
Warburg Pincus Sells 2.28% In Kotak Mahindra For Rs 768Cr

Warburg Pincus Sells 2.28% In Kotak Mahindra For Rs 768Cr

Madhav A Chanchani 6 years ago
Private equity major Warburg Pincus has started exiting private sector lender...
Warburg Pincus sells 25% stake in Capital First; GIC ups bet

Warburg Pincus sells 25% stake in Capital First; GIC ups bet

TEAM VCC 8 months ago
Private equity giant Warburg Pincus has sold a 25% stake in non-banking finance...
Jaypee Infratech Falls 12% On Debut

Jaypee Infratech Falls 12% On Debut

Reuters 8 years ago
Shares in India’s Jaypee Infratech fell as much as 12 percent on Friday,...
No Comments

IDFC Bank, Warburg-backed Capital First to merge in $1.5 bn deal

Powered by WordPress.com VIP