AU Small Finance Bank and Fincare Small Finance Bank approve all-stock merger
The Boards of Directors at AU Small Finance Bank Ltd (AU SFB) and Fincare Small Finance Bank Ltd (Fincare SFB) have agreed upon an all-stock merger, a decision made in their respective meetings yesterday. According to the merger terms, shareholders of Fincare SFB will receive 579 shares of AU SFB for every 2,000 shares of Fincare SFB they hold. Post-merger, shareholders of Fincare SFB will own approximately 9.9% of AU SFB.
Regulatory Approvals and Financial Advisory
This amalgamation, under Section 44A of the Banking Regulation Act, 1949, is pending approval from the shareholders of both banks, the Reserve Bank of India, and the Competition Commission of India. Promoter of Fincare SFB, Fincare Business Services Ltd (FBSL), will infuse INR 700 Cr into Fincare SFB before completing the merger. Financial and legal advisors including ICICI Securities Limited, Arpwood Capital Pvt Ltd, AZB & Partners, and Anagram Partners have played crucial roles in facilitating this transaction.
Management and Strategic Implications
Post-merger, Rajeev Yadav, the MD & CEO of Fincare SFB, will be appointed as the Deputy CEO of AU SFB, reporting to Sanjay Agarwal, the current MD & CEO of AU SFB. The merger promises to create a pan-India retail banking franchise with a customer base exceeding 98 lac, over 43,000 employees, and 2,334 touchpoints across various states and union territories. The united entity aims to leverage each bank’s strengths in rural, microfinance, and digital banking to enhance their financial inclusion charter.
Anticipated Synergies and Future Outlook
The merged bank is set to benefit significantly from synergies in deposits, technology, and scale-driven efficiencies, likely enhancing key financial metrics. With a commitment to financial inclusion and an expansive product suite, this merger is poised to reshape the Indian retail banking sector, creating a powerhouse of financial services aimed at supporting micro-entrepreneurs and small enterprises across the nation.
Both AU SFB and Fincare SFB have received continuous recognition as ‘Great Place to Work’, underscoring the importance of people and culture in this strategic merger. As stated by Mr. Sanjay Agarwal and Mr. Rajeev Yadav, this merger is more than a business decision; it represents the union of shared values and a vision aimed at building a robust, inclusive, and technology-forward banking institution in India.