After IDFC Bank and MSME lender Capital First announced a merger in a all-share swap, global firm Warburg Pincus, the single largest investor in Capital First said that it will continue to remain invested in Capital First post merger. IDFC Bank and Capital First, had announced a merger in January-18, which will create a combined entity with assets under management of Rs 88,000 crore and a customer base of 50 lakh. Charles Kaye, Co-CEO and Vishal Mahadevia, Head-India of Warburg Pincus told CNBC TV18 that the firm will apply to the India’s Central bank RBI for approval to hold 10% stake in the merged entity. Further, Vishal Mahadevia said that merger with IDFC Bank gives capital first another opportunity to grow.
Warburg Pincus says that it acquired control from the Future Group, and built a very robust franchise, and now the opportunity with IDFC Bank is the chance to take that to the next level, by combining the strengths of both the companies.
The merger requires IDFC Bank to issue 139 shares for every 10 shares of Capital First, the two companies had said in a joint statement. Following the arrangement, existing shareholders of IDFC Bank and First Capital will retain ownership shares of about 71.2% and 28.8%, respectively. Capital First has a strong retail lending franchise with a loan book of Rs 22,974 crore as on September 2017, a live customer base of three million, and a distribution network in 228 locations across the country.
IDFC Bank Managing Director and CEO Rajiv Lall said that the merger will be transformational for IDFC Bank. “It will bring two tech savvy, culturally aligned platforms to come together to create a diversified and fast growing universal bank with a national footprint, in a manner that will be value accretive for all shareholders,” Rajiv Lall said in a statement. Capital First said that V Vaidyanathan, who is currently chairman and MD of Capital First, will succeed Lall as MD and CEO of the combined entity upon completion of the merger and necessary regulatory approvals.