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Business News/ Companies / News/  AU, Fincare small finance banks to merge
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AU, Fincare small finance banks to merge

Under the amalgamation plan, shareholders of Fincare Small Finance Bank will get 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares they own.

AU Small Finance Bank, Fincare Small Finance Bank to merge. (Photo: Aniruddha Chowdhury/Mint)Premium
AU Small Finance Bank, Fincare Small Finance Bank to merge. (Photo: Aniruddha Chowdhury/Mint)

Mumbai: AU Small Finance Bank Ltd on Sunday said it will take into its fold peer lender Fincare Small Finance Bank in the first such merger between two such institutions.

Under the amalgamation plan, shareholders of Fincare Small Finance Bank will get 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares they own.

Set up to push financial inclusion by providing an outlet for savings and by providing access to credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, these banks were set up under an RBI policy from 2014. While AU Small Finance Bank started operations in April 2017, Disha Microfin (which later became Fincare SFB after a merger with Future Financial Services) commenced operations in July 2017.

“The scheme is subject to approval of the respective shareholders of the transferor company (Fincare Small Finance Bank Ltd) and transferee company (AU Small Finance Bank Ltd), the Reserve Bank of India (RBI) and the Competition Commission of India (CCI)," AU SFB said in a regulatory filing late on Sunday evening.

The statement said that the appointed date of the scheme shall be 1 February 2024, or a date as may be fixed mutually by both companies and approved by RBI.

As of 30 September, AU Small Finance Bank had total assets of 95,977 crore and a net worth of 11,763 crore, while Fincare Small Finance Bank had total assets of 14,777 crore and a net worth of 1,539 crore. While shares of AU SFB are listed on the stock exchanges, Fincare SFB’s plan for a share sale received a nod from the market regulator Securities and Exchange Board of India (Sebi) last month.

The statement said that the banks believe the consolidation is “founded on leveraging of the significant complementarities that exist between both the small finance banks, particularly relating to branch network, product offerings and customer segments".

“This revenue synergy-led and growth-oriented amalgamation, adopting best practices of banking, technology, governance and prudence from both banks, is expected to result in a superior platform benefitting from efficiencies of size and scope over time for all stakeholders such as customers, employees, and shareholders," it said.

As of 30 September promoters held 25.49% in AU Small Finance Bank, while in Fincare, promoters owned 78.58% as of 31 March.

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ABOUT THE AUTHOR
Shayan Ghosh
Shayan Ghosh is a national editor at Mint reporting on traditional banks and shadow banks. He has over 12 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Published: 30 Oct 2023, 07:40 AM IST
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