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Fincare Small Finance Bank (Fincare SFB) is set to merge with AU Small Finance Bank (AU SFB) from February 1, 2024. The merger is subject to all necessary approvals. In a regulatory filing released late in the evening, AU SFB announced its approval of the amalgamation. As per the terms of the merger, shareholders of Fincare SFB will receive 579 shares in AU SFB for every 2,000 shares they hold in Fincare SFB. Following the transaction, it is expected that existing shareholders of Fincare SFB will maintain approximately 9.9% ownership in AU SFB.
The completion of this transaction is subject to several critical conditions, including approval from the shareholders of both Fincare SFB and AU SFB, regulatory endorsements from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI), and a capital infusion of Rs. 700 crores by the promoters of Fincare SFB.
AU SFB has confirmed that all employees of Fincare SFB will be included in the AU SFB family after the merger.
As part of this strategic merger, the Managing Director & CEO of Fincare SFB will become the Deputy CEO of AU SFB after the merger. Additionally, Divya Sehgal, a current director on Fincare SFB's board, will join AU SFB's board, further strengthening the leadership team.
Fincare Small Finance Bank, a digitally enabled small finance bank, offers a broad range of deposit and asset solutions to its customers, with a total customer base of approximately 54 lakh.
It has a strong presence in South India, with 14,867 employees, and a focus on microfinance loans, with 93.6% of its loans being directed towards rural areas. The bank's total deposits are reported to be Rs 9.453 crore, with 79% of deposits being retail, and gross advances amounting to Rs 10.541 crore.
It has 1,292 banking branches in 23 states and Union territories and is expected to have a total branch count of 2,334 by the completion of the merger. The merged entity is expected to serve approximately 98 lakh customers and employ around 43,000 people by the end of September 2023, with a combined balance sheet size of more than Rs 1,1 lakh crores.
The merger between AU SFB has a multifaceted strategic rationale, with the management highlighting the complementary branch footprint that will establish a Small Finance Bank across India. The portfolio diversification, especially through access to rural and financial inclusion-focused microfinance businesses, is regarded as a significant advantage.
This merger presents significant opportunities to expand the deposit and asset franchise, particularly in South India.
Source
The completion of this transaction is subject to several critical conditions, including approval from the shareholders of both Fincare SFB and AU SFB, regulatory endorsements from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI), and a capital infusion of Rs. 700 crores by the promoters of Fincare SFB.
AU SFB has confirmed that all employees of Fincare SFB will be included in the AU SFB family after the merger.
As part of this strategic merger, the Managing Director & CEO of Fincare SFB will become the Deputy CEO of AU SFB after the merger. Additionally, Divya Sehgal, a current director on Fincare SFB's board, will join AU SFB's board, further strengthening the leadership team.
Fincare Small Finance Bank, a digitally enabled small finance bank, offers a broad range of deposit and asset solutions to its customers, with a total customer base of approximately 54 lakh.
It has a strong presence in South India, with 14,867 employees, and a focus on microfinance loans, with 93.6% of its loans being directed towards rural areas. The bank's total deposits are reported to be Rs 9.453 crore, with 79% of deposits being retail, and gross advances amounting to Rs 10.541 crore.
It has 1,292 banking branches in 23 states and Union territories and is expected to have a total branch count of 2,334 by the completion of the merger. The merged entity is expected to serve approximately 98 lakh customers and employ around 43,000 people by the end of September 2023, with a combined balance sheet size of more than Rs 1,1 lakh crores.
The merger between AU SFB has a multifaceted strategic rationale, with the management highlighting the complementary branch footprint that will establish a Small Finance Bank across India. The portfolio diversification, especially through access to rural and financial inclusion-focused microfinance businesses, is regarded as a significant advantage.
This merger presents significant opportunities to expand the deposit and asset franchise, particularly in South India.
Source
