On Sunday night, AU Small Finance Bank announced the merger of Fincare Small Finance Bank into itself. This merger, which was first reported by businessline on September 13, will expand AU SFB’s reach and diversify its offerings, reinforcing its commitment to financial inclusion.
The merger is subject to approval by the respective shareholders of AU SFB and Fincare SFB, as well as the Reserve Bank of India and the Competition Commission of India (CCI). According to AU SFB’s exchange filing, the merged entity is expected to be operational from February 1, 2024, suggesting that the deal should close in FY24 subject to regulatory approvals.
The share exchange ratio for the amalgamation will be 579 equity shares of AU SFB for every 2,000 equity shares of Fincare SFB. Based on this exchange ratio, Fincare SFB is valued at around 3x price to book based on Q2 FY24 financials, while AU SFB is valued at around 4x price to book.
With a predominantly microfinance-oriented book, the merger with Fincare SFB will give AU SFB access to MFI loans and better penetration into the southern markets.
As of September 30, 2023, AU Small Finance Bank Limited had total assets of ₹95,977 crore, net worth of ₹11,763 crore, turnover of ₹9,240 crore, and profit after tax of ₹1,428 crore for the year ended March 31, 2023 and ₹789 crore for the half year ended September 30, 2023.
As of September 30, 2023, Fincare Small Finance Bank Limited had total assets of ₹14,777 crore, net worth of ₹1,539 crore, turnover of ₹1,360 crore and profit after tax of ₹219 crore, and total assets of ₹12,467 crore, net worth of ₹1,314 crore, turnover of ₹1,970 crore, and profit after tax of ₹104 crore for the year ended March 31, 2023.
