The news of AU small finance bank acquires Fincare Small Finance Bank has created a buzz in the Indian financial market. Recently, AU Small Finance Bank Ltd has announced its decision to merge with Fincare Small Finance Bank, marking the first-ever amalgamation between two small finance institutions.
This strategic move is expected to have far-reaching implications for the financial sector, particularly in terms of financial inclusion and access to credit for small business units, small and marginal farmers, micro and small industries, and other unorganized sector entities.
Details of the AU Small Finance Bank & Fincare Small Finance Bank Merger
The amalgamation plan outlines that shareholders of Fincare Small Finance Bank will receive 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares they own. This move comes as part of a broader initiative to leverage the significant complementarities that exist between the two banks, particularly in terms of branch network, product offerings, and customer segments.
AU Small Finance Bank Acquires Fincare Small Finance Bank: Benefits of the Merger
The consolidation is expected to result in a superior platform that benefits from efficiencies of size and scope over time, ultimately benefiting all stakeholders, including customers, employees, and shareholders. The scheme is subject to approval from the respective shareholders of both banks, the Reserve Bank of India (RBI), and the Competition Commission of India (CCI), with the appointed date of the scheme set for 1 February 2024.
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Financial Implications
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. The shares of AU SFB are listed on the stock exchanges, and Fincare SFB’s plan for a share sale received approval from the market regulator Securities and Exchange Board of India (Sebi) last month.
The banks believe that the consolidation will result in revenue synergy-led and growth-oriented amalgamation, adopting best practices of banking, technology, governance, and prudence from both banks.
This is expected to create a superior platform that benefits from efficiencies of size and scope over time, ultimately benefiting all stakeholders, including customers, employees, and shareholders.
