IDFC Bank, a private-sector lender in India, and Warburg Pincus-backed Capital First have inked an agreement to merge their operations in an all-share deal.

Under the terms of the deal, IDFC Bank will issue 139 shares for every 10 shares of Capital First.

The move is part of IDFC Bank’s strategy of “retailising” its business and transforming it into a well-diversified universal bank.

Capital First has a retail lending franchise with a loan book of INR229.7bn ($3.6bn) as of September 2017, a customer base of three million customers; and a distribution network in 228 locations across the country.

Upon completion of merger, the merged entity will have an AUM of INR880bn ($13.7bn) and sere more than five million customers. It will have 194 branches and over 9,100 micro ATM points across India.

Upon completion of the merger, Vaidyanathan, currently chairman and MD of Capital First, will succeed Rajiv Lall as MD and CEO of the combined entity. Lall will assume the role of non-executive chairman of IDFC Bank.

Lall said: “We believe this merger will be transformational for IDFC Bank. It will bring two tech savvy, culturally aligned platforms to come together to create a diversified and fast growing universal bank with a national footprint, in a manner that will be value accretive for all shareholders.

“Vaidya has built a terrific franchise and team. He comes with a proven track record, the right experience and the leadership skills to firmly establish the combined entity amongst the highest echelons of Indian banking.”

The merger is subject to regulatory and shareholder approvals.