India's AU Small Finance Bank to buy peer Fincare in $530 mln all-stock deal (updated)

AU Small Finance Bank

30/10/2023 05:11

(Recasts to add deal value, shares, analyst comment)
       MUMBAI, Oct 30 (Reuters) - Indian lender AU Small
Finance Bank  AUFI.NS  said on Sunday it will buy IPO-bound peer
Fincare Small Finance Bank in an all-stock deal worth 44.11
billion rupees ($529.80 million), as it seeks to expand its
presence in southern India and enter the microfinance space.
        Shareholders of Fincare Small Finance Bank, which had
filed IPO papers in May, will receive 579 equity shares of AU
Small Finance Bank for every 2,000 shares of the former,
according to the proposal. Fincare has about 221 million
outstanding shares, according to its IPO filing.
    After the merger, shareholders of Fincare will hold close to
9.9% in AU Small Finance Bank, according to an investor
presentation.
    The combined entity will have a balance sheet of 1.1
trillion rupees ($13.21 billion).
    Shares of AU Small Finance Bank dropped nearly 9% to their
lowest since mid-April in Monday trading. 
    The main strategic pivot for AU Small Finance Bank in the
deal is an increased focus on unsecured lending, Shailesh
Kanani, an analyst at Centrum Broking, said.
    This shift could potentially expose the bank to
macroeconomic challenges, which, up until this point, it has
managed to weather more effectively than its peers, he added.
     The transaction will need to be approved by the Reserve
Bank of India. The appointed date for the amalgamation is set
for Feb. 1, 2024.    

($1 = 83.2580 Indian rupees)

 (Reporting by Ira Dugal and Chris Thomas; Editing by Rashmi
Aich and Mrigank Dhaniwala)
 ((Ira.Dugal@thomsonreuters.com; +91-9833024892;))