Diversified financial services firm Infrastructure Development Finance Company Ltd (IDFC) has received the board’s approval to demerge its financial undertaking into its wholly-owned step down subsidiary IDFC Bank Ltd, as per a stock market disclosure.
The board of directors at its meeting held on Thursday, also approved the listing of shares of IDFC Bank on National Stock Exchange of India Ltd (NSE) and Bombay Stock Exchange Ltd (BSE), it said.
The financial undertaking would include transferring related businesses of financing, project finance (fund and non fund based), fixed income and treasury comprising all assets, liabilities, movable & immovable properties, employees, consents, approvals, benefits, licenses, contracts, deeds and tax balances to IDFC Bank.
Post demerger, around 53 per cent stake in IDFC Bank will be held by IDFC Financial Holding Company Ltd (FHCL), a wholly-owned subsidiary of IDFC Ltd and remaining 47 per cent will be held by the shareholders of IDFC Ltd.
The demerger will leave IDFC with other businesses such as windmill operations, shares in IDFC FHCL and other entities including IDFC Alternatives and IDFC Securities.
The move is to comply with RBI norms for new private sector banks which calls for separation of banks from
non-lending business and banks to be controlled by a financial holding company, which can separately promote other regulated financial services activities.
In August this year, IDFC and Bandhan received banking licences. IDFC named Ravi Shankar to head the bank.
As per the demerger proposal, IDFC will issue one equity share of Rs 10 each, fully paid up of IDFC Bank Ltd for every one equity share of Rs 10 each held in IDFC Ltd, to the shareholders as on the record date.
Amarchand & Mangaldas & Suresh A. Shroff & Co, Deloitte Haskins & Sells LLP and SSPA & Co are acting as legal advisors, tax advisors and chartered accountants, respectively, while JM Financial provided the fairness opinion on the share entitlement ratio adopted under the scheme.
Starting as an infrastructure finance company, IDFC has diversified over the years and has presence across various financial services segments, including mutual fund, private equity advisory and broking.
IDFC’s scrip closed at Rs 148.70 each, up 2.59 per cent on BSE in a strong Mumbai market on Thursday.
(Edited by Joby Puthuparampil Johnson)