IDFC Bank to buy Warburg-backed Capital First in $1.5 billion stock deal

- Reuters, MUMBAI

Jan 14, 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.

Published: 14-01-2018 09:31

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