IDFC First Bank Limited

Impact of this new scheme declared by the Government today for MSMEs on IDFC Bank ?

Capital First (Mr Vaidyanathan) has been targeting the MSME sector specifically with their digital / fin tech approach which is a big USP in retailisation of the IDFC Bank loan book post merger.

While I have not gone through the fine print, the new scheme announced by the government provides the following :

  1. Quick approval (likely under an hour)
  2. Interest rebate - around 2% rebate for loans up to 1cr for GST registered MSMEs

Apparently public sector banks are pulled in for this purpose (not sure).

The question is how badly will it affect IDFC First Bank which had planned to aggressively target this space ? My guess is that the lure of interest concession / rebate (which has a direct impact on the MSMEs financial position) would impact the growth projections planned by the bank. But will need to wait and watch how the story unfolds.

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NCLT approves merger

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As always, Mr. Vaidyanathan seems very enthusiastic about what he wants to do.

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He has had two good successes so far : being part of core team that scaled up ICICI Bank , and building Capital First from scratch. Most entrepreneurs are one-hit wonders!

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Yes. In ICICI BANK he played his part in building retail liabilities and in CAPITAL FIRST he built retail assets.

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IDFC Banks new interest rates , Mr.V have started his work…

Balance in Rs. Interest Rate (p.a.)
Up to 1 Lakh 6.00%
> 1 Lakh to 2 lakhs 6.50%
> 2 lakhs to 10 Crores 7.00%
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I am hoping they will have a better website soon. This one looks pretty plain and doesn’t gives confidence a bank site should. Looking forward to an effective re-branding.

“If you end up owning a fantastic business, then plan to hold it for a long time. And prepare yourself for a roller coaster ride. If you have chosen the right business to own, the ride will be worth it in the end.” Prof Sanjay Bakshi

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On allotment of IDFC Bank shares to Capital first Holders.

Disc: Invested in CAPF.

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Shareholding looks as below, post merger

But I noticed that V Vaidyanathan and V. Vaidyanathan (In capacity of Trustee of Rukmani Social Welfare Trust) are listed among Public shareholders and classified under " Details of the shareholders acting as persons in Concert for Public along with another 4 more parties. Can someone explain why he is treated as Public and what it means acting as persons in Concert for Public means ?

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Example of Acting in Concert

It was alleged that Bill Ackman, leader of hedge fund Pershing Square Capital Management, and Michael Pearson, CEO of Valeant Pharmaceuticals International, acted in concert to try to purchase Botox maker Allergan Inc. in 2014. Ackman’s fund independently accumulated a large position in Allergan and then teamed up with Valeant to bid for Allergan. Allergan, which did not want to be acquired by Valeant, and two state pension plans sued Ackman and Valeant for violating securiities laws on the grounds of insider trading. In the meantime, Allergan began putting together a deal with Actavis Plc to thwart efforts by Ackman and Valeant.

Actavis and Allergan did end up consummating a deal in March 2015, which delivered a huge investment gain to Ackman. He squandered those gains and more, however, after he reinvested the proceeds into Valeant, whose enormous debt levels and alleged fraudulent accounting practices sent investors fleeing. Valeant stock had soared over $250 per share in July 2015; when Ackman sold his shares in March 2017, they were trading at around $11 per share. Adding insult to injury, Ackman was forced to finally settle the outstanding lawsuit against him, paying $193.75 million. Valeant agreed to pay $96.25 million, the other portion of the $290 million total settlement. Acting in concert with Valeant was a painful experience for Bill and Michael.

Source: https://www.investopedia.com/terms/a/acting-in-concert.asp

@james_kerala - since this is not a hostile acquisition/takeover, IMHO “acting in concert” may not apply to IDFC and Capital First case.

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On change of guard idfc bank might be a good bet; but next hdfc bank is just a speculation right now. It’ll lot more than just a change of guards. First of all they have to work very hard on casa. There is no doubt about the capabilities of mr. Vaidyanathan, the same story emerges after the demerger, rest is history. Let’s see how new team in the helm executes.

Disc. invested in different levels

IDFC First Bank Q3: Net Loss Rs 1,538 Cr. Is this due to merger? How the calculation done and why this kind of numbers reported. Anyone did any analysis please explain.

No big analysis needed. Just need to read notes of the quarterly financial statements. Below sharing the screenshot of note #5:

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Net-net, they got additional 1000cr as tax credit…and so the book value which was supposed to be ~37, is now about 38.5/- per share.

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What is this ‘Goodwill on it’s balance sheet’ and how this adjustment happened in case of merger that both profit making entity reporting loss in next quarter after merger. It would be helpful to understand this situation for me being a non finance background investor.

part of amount paid to acquire asset which is over and above the book value of the asset being acquired is goodwill.

Say book value is Rs 100. But acqusition cost is Rs 150. In this case goodwill is Rs 50…

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