IDFC First Bank Shares Slide Amidst Warburg Pincus Exit Reports

On March 28, shares of IDFC First Bank declined 3.5 percent following reports of a significant block deal on the exchange. The transaction, valued at ₹1,386 crore, saw approximately 18.3 crore shares—equivalent to a 2.6 percent stake—change hands.

As of 09:19 am on the same day, IDFC shares traded at ₹75.60 on the NSE. This marked a decline from the previous day’s closing price of ₹77.81 apiece on the BSE.

Warburg Pincus’ Exit Strategy Unveiled in IDFC First Bank:

CNBC-TV18 unveiled details regarding Warburg Pincus’ intention to divest its stake in IDFC First Bank. Through its affiliate Cloverdell Investment, the entity aimed to sell its entire 2.25 percent stake, totaling 15.9 crore shares, with a target valuation of at least ₹1,191.40 crore.

Brokerage and Previous Divestments:

Morgan Stanley was purportedly brokering the deal, adding weight to the divestment’s significance. This move isn’t unprecedented, as Warburg Pincus had previously diluted its holdings in IDFC First Bank. In December, an open market transaction divested a 1.3 percent stake worth ₹790 crore.

Warburg Pincus had initiated divestments earlier as well. In September of the previous year, an affiliate of Warburg Pincus offloaded a 4.2 percent stake in IDFC, amounting to ₹2,480.34 crore.

Stake Details and Financial Performance of IDFC First Bank:

Reports indicate that Cloverdell Investment previously held a 7.12 percent stake in the private lender by the end of the first quarter of FY24. 

Despite the divestment news, IDFC First Bank showcased resilience in its financial performance, reporting an 18 percent growth in net profit to ₹716 crore for the 3rd quarter ended December 31, 2023.

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