Fincare Small Finance Bank (Fincare SFB) is scheduled to merge with AU Small Finance Bank (AU SFB) starting from February 1, 2024, pending all requisite approvals. AU SFB released a regulatory filing in the late evening, confirming the approval of the amalgamation.
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.
- Shareholders of Fincare SFB will receive 57 shares I AU SFB for every 2000 shares they hold in Fincare SFB.
- Following the transacation, it is expected that exisiting shareholders of Fincare SFB will maintain approx 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.
Organisation shift
- AU SFB has confirmed that all employees of Fincare SFB will be included in the AU SFB family after the 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 operates 1,292 banking branches across 23 states and Union territories, with an anticipated total branch count of 2,334 following the merger. The merged entity is projected to cater to roughly 98 lakh customers and have a workforce of approximately 43,000 individuals by the end of September 2023. Moreover, the combined balance sheet size is expected to exceed Rs 1.1 lakh crores.
The AU SFB merger entails a comprehensive strategic rationale, emphasizing the establishment of a unified Small Finance Bank across India with a complementary branch footprint. The noteworthy advantage lies in portfolio diversification, particularly through access to rural and financial inclusion- oriented microfinance businesses, as highlighted by the management.
This merger presents significant opportunities to expand the deposit and asset franchise, particularly in South India.
