
Shares of AU Small Finance Bank Ltd (AU SFB) will be in focus on Monday morning after the small finance bank said its board has okayed a scheme of amalgamation of Fincare Small Finance Bank with self. The merger is expected to leverage 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, is expected to result in a superior platform, benefitting from efficiencies of size and scope over time for all stakeholders,” AU SFB said in an overnight release to stock exchanges.
In the BSE filing, AU SFB said the share exchange ratio for the amalgamation of the transferor company into and with the transferee company would be 579 equity shares of face value of Rs 10 each of the AU Small Finance for every 2,000 shares of face value of Rs 10 each of the Fincare Small Finance Bank.
AU SFB said the move would accelerate building up of a pan India distribution franchise and would also lead to diversification of portfolio with access to rural geography and micro finance business leading to greater financial inclusion.
The proposed amalgamation would enhance reach and distribution, and help expand geographic coverage thereby leading to accelerated expansion of both deposit and asset franchise across complementary markets, AU SFB said.
The merger may also realise synergies arising from the combination including revenue synergies from cross sell to the transferor company’s deposit base, reduction in funding cost and realisation of scale driven productivity and cost efficiencies over time, AU SFB said.
Besides, AU SFB said, the merger may provide customers of both the lenders with access to wider suite of products and services. "The scheme is subject to approval of the respective shareholders of the Transferor Company and
Transferee Company, the Reserve Bank of India (RBI) and the Competition Commission of India (CCI)," the lender said.
The scheme will be operative from the effective date. The ‘Appointed Date’ is likely to be February 1, 2024.
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