EXPLAINED | What IDFC-IDFC First merger means for investors

Days after a mega merger between HDFC and HDFC Bank saw the light of day, IDFC First Bank received approval from its board to merge its operations with IDFC and IDFC Financial Holding. IDFC said the proposed deal will create value for its shareholders and provide direct shareholding in IDFC First Bank.

Here are 10 key things to know about the proposed IDFC-IDFC First Bank merger: 

• IDFC First Bank and IDFC shares staged mixed moves after the development. The stock of IDFC gained by Rs 6.6 or six per cent at the strongest level of the day to touch a record high of Rs 115.7 apiece on BSE, but that of IDFC First Bank fell by as much as Rs 4.8 or 5.9 per cent to Rs 77.1 apiece.
• The merger of IDFC with IDFC First Bank marks the first big consolidation in the country's banking space after the HDFC twins completed the process of amalgamation between them to create one of the biggest financial institutions in the world. The HDFC-HDFC Bank merger is the biggest in the country's corporate history. 
• As part of the proposed IDFC-IDFC First Bank merger, investors will get 155 IDFC First Bank shares for every 100 shares held in IDFC, according to a regulatory filing. 
• Analysts say the share-swap ratio proposed under the merger is likely to be beneficial for IDFC shareholders. 
• The deal, subject to regulatory approvals, will eliminate promoter holdings, IDFC First Bank said.
• CLSA maintained its 'underperform' rating on IDFC First Bank with a target of Rs 85, implying upside potential of 3.7 per cent from Monday's price. Morgan Stanley retained 'equal-weight' on the stock with a target price of Rs 80. 
• Currently, IDFC, through its subsidiary IDFC FHCL, holds a 39.93 per cent stake in IDFC First Bank.  
• The proposed three-pronged merger is set to simplify the companies' corporate structure and ease regulatory compliance. 
• It will boost IDFC First Bank's standalone book value by 4.9 per cent, as of March 31, 2023, the lender said. 
• The amalgamation will also strengthen IDFC First Bank's balance sheet by 20-25 per cent a year over the near to medium term, it added.

 With inputs from agencies