AU Small Finance Bank And Fincare Small Finance Bank Board Approves An All-Stock Merger

The Board of Directors of AU Small Finance Bank Ltd (AU SFB) and the Board of Directors of Fincare Small Finance Bank Ltd (Fincare SFB), at their respective meetings held earlier yesterday, approved an all-stock merger of AU SFB and Fincare SFB, tne company on Monday announced through an exchange filing.

The scheme of amalgamation, under Section 44A of the Banking Regulation Act, 1949, is subject to the approval of shareholders of AU SFB and Fincare SFB respectively, Reserve Bank of India under the Banking Regulation Act and the Competition Commission of India. Upon obtaining the required approvals, Fincare SFB shall merge into AU SFB and Shareholders of Fincare SFB shall receive shares of AU SFB in exchange for theirsharesin Fincare SFB at the approved share swap ratio. All employees of Fincare SFB shall become part of the AU SFB family.

Merger Terms

The Boards of AU SFB and Fincare SFB respectively considered the results of due diligence of key aspects of each other’s business operations. According to terms, Fincare Business Services Ltd (FBSL), promoter of Fincare SFB, shall infuse Rs 700 Cr into Fincare SFB prior to the completion of the merger.

Bansi S. Mehta Valuers LLP, and RBSA Valuation Advisors LLP, the independent valuers appointed by AU SFB and Fincare SFB respectively, have recommended a share exchange ratio, which has been accepted by the respective Boards. JM Financial Limited provided a Fairness Opinion to AU SFB on the share exchange ratio and IIFL Securities Ltd. provided a Fairness Opinion to Fincare SFB. Accordingly, Fincare SFB shareholders shall receive 579 shares in AU SFB for 2,000 shares of Fincare SFB. Post merger, existing shareholders of Fincare SFB shall hold ~9.9% in AU SFB.

ICICI Securities Limited and Arpwood Capital Pvt Ltd acted as Financial Advisors to Fincare SFB on the transaction and Ambit Pvt Ltd and Mirae Asset Capital Markets(India) Pvt. Ltd. Acted as Financial Advisors to AU SFB. AZB & Partners acted as Legal Advisors to AU SFB and Anagram Partners acted as Legal Advisors to Fincare SFB. KPMG and PwC acted as Diligence Advisors to AU SFB and Fincare SFB respectively.

Rajeev Yadav, the MD & CEO of Fincare SFB, will be appointed Deputy CEO of AU SFB post-merger. He will report to Sanjay Agarwal, MD&CEO of AU SFB. Mr. Yadav will continue to lead the Fincare unit of AU SFB, which will house most of the businesses of Fincare SFB. Additionally, he will jointly lead the IT & Digital unit of AU SFB with the MD & CEO of AU SFB, to ensure smooth IT integration post-merger. In his new role, Mr Yadav will be an invitee to Board meetings of AU SFB.

Divya Sehgal, Nominee Director on Fincare SFB’s Board will join the Board of AU SFB to ensure smooth integration and continuity post-merger.

Uttam Tibrewal, Executive Director at AU SFB at present, will be elevated to Executive Director & Deputy CEO of AU SFB in the merged entity.

Shares

The shares of AU Small Finance Bank Ltd on Monday at 12:24 pm IST  were trading at Rs 649, down by 5.96 percent.