New avatar for financial dominance- IDFC to merge with IDFC First Bank!

The company has delivered stellar returns of 127 per cent over the past year and whopping returns of 185 per cent over the past 3 years.

IDFC First Bank is an Indian private sector bank formed by the merger of the banking arm of Infrastructure Development Finance Company and Capital First, an Indian non-bank financial institution.

IDFC FIRST Bank has announced the approval of a Scheme of Amalgamation with IDFC Limited. Under this scheme, for every 100 equity shares of IDFC Limited, shareholders will receive 155 equity shares of IDFC FIRST Bank. The merger aims to simplify the corporate structure and streamline regulatory compliances. It will also create a consolidated entity with diversified shareholders and no promoter holding. However, the merger is subject to approvals from regulatory authorities, including RBI, SEBI, and the Competition Commission of India, as well as shareholders and stock exchanges.

The process will take 9-12 months and is subject to regulatory approvals. The current price ratio for the merger offers a 16 per cent discount. This presents an arbitrage opportunity for IDFC First Bank shareholders. The merger is expected to stabilize the spread at around 8 per cent - 10 per cent. IDFC First Bank's potential migration to the MSCI India Standard index and the availability of futures and options trading for both entities will help control the spread. Overall, the merger holds lucrative prospects for IDFC First Bank shareholders.

The company has delivered stellar returns of 127 per cent over the past year and whopping returns of 185 per cent over the past 3 years.

On Tuesday, shares of the company plunged by 5.11 per cent to trade at Rs 77.75.

Investors should keep a close eye on this trending stock.