India-based Finance Company IDFC to Merge with Its Private Bank

India-based Infrastructure Development Finance Company Limited (IDFC Ltd.), which provides finance and advisory services for infrastructure projects, announced intentions to merge with its private sector lender, IDFC First Bank.

The law firm, Cyril Amarchand Mangaldas, will conduct legal due diligence, draft amalgamation documents and file regulatory applications.

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All stages in the corporate simplification process have been completed, IDFC Ltd. stated in a filing. Amalgamation with the bank is the next step.

First Bank shares rose 1.4% and IDFC Ltd. shares jumped 2.6% following the announcement. First Bank is expected to continue to perform well in the near term.

“With balance sheet restructuring largely done, pedaling growth with entry in new segment (digital, gold, personal loans and credit cards) is in focus. Key variable to drive further improvement in return ratios is improvement in CI ratio from current 73.3% to targeted 55.0% in FY25E,” brokerage house ICICI Direct wrote in a note. It added that “strong retail execution, steady credit cost and improving efficiency should drive RoE at 10.0-12.0% in FY24-25E.”