IDFC, currently among the top five gainers on the BSE, the stock opened 3% higher at Rs.54 and went up further by over 9.5% to hit an intraday high at Rs.56.90 and remains firmly around the same levels presently.
The stock is reacting to the news of yesterday wherein IDFC informed the exchanges that IDFC Financial Holding Company Limited, a wholly owned subsidiary of IDFC Limited, has submitted a letter to IDFC First Bank with respect to unlocking value for shareholders of IDFC Ltd.
IDFC is the promoter of IDFC FIRST Bank and is currently holding through its wholly owned subsidiary, IDFC Financial Holding Company (FHCL), 36.50% equity in IDFC FIRST Bank. Under the 2013 guidelines of RBI, IDFC, as a promoter, was required to hold a minimum 40% share-holding for a period of 5 years from commencement date of operations of the bank. This five-year lock-in period ended on September 30, 2020 and this means, IDFC can now exit as the promoter of IDFC FIRST Bank.
Besides holding this investment in IDFC First Bank, IDFC FHCL also holds 100% in the IDFC Asset Management Company Limited (IDFC AMC). IDFC Ltd.’s Board of Directors at its meeting held on September 17, 2021 had approved the sale of IDFC AMC and is taking necessary steps to complete the same.
After the sale of IDFC AMC, IDFC Ltd. will hold its investment in IDFC First Bank and the post-tax cash realized on sale of IDFC AMC. In addition, the IDFC Ltd group corporate structure currently includes the IDFC Foundation and two underlying Joint Ventures with the Delhi Govt and Karnataka Govt respectively. Actions for the suitable disposition of these entities are in process.