Capital First's merger with IDFC Bank gets RBI nod

The Reserve Bank of India has issued a no objection certificate to the deal of merger between IDFC Bank and Capital First. After getting the RBI's nod, IDFC Bank will now have to approach the shareholders and creditors of the merged companies. A nod from the NCLT is also required to clear the way for both the entities to merge. We expect that both the stocks, IDFC Bank and Capital First, would react positively on this news and trade with positive bias.

The Boards of IDFC Bank (IDFCB) and Capital First (CAFL) have already approved a merger of the two entities at a 13.9:1 swap ratio. We believe this merger would have benefits for shareholders of both companies. IDFC Bank presently has ~2.5mn customers and Capital First has ~6mn cutomers. So the combined entity will have ~6mn customers, which the management expects to grow by 3 lakh customers/ month in a combined entity.

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