The board of directors of IndusInd Bank and the board of directors of Bharat Financial Inclusion at their respective meetings held, have approved a merger of the two entities to create a stronger and more sustainable platform for Financial Inclusion.
The merger will be effected through an all-stock transaction of Bharat Financial Inclusion Limited into IndusInd through a Composite Scheme of Arrangement. The Scheme contemplates merger of Bharat Financial with IndusInd and simultaneous transfer of Bharat Financial Inclusion Business Correspondent operations into a Wholly Owned Subsidiary of IndusInd, which shall be incorporated after receipt of requisite regulatory approvals (BC-WOS). All the assets and liabilities originated by the BC-WOS will be booked in the Balance Sheet of IndusInd. As an integral part of the Scheme, there shall be a preferential allotment of warrants to the Promoters of IndusInd in accordance with the applicable RBI and SEBI guidelines as an anti-dilutive measure.
The scheme is subject to the approval of the Reserve Bank of India, the Competition Commission of India, the Securities and Exchange Board of India / Stock Exchange(s), shareholders and creditors of IndusInd and Bharat Financial Inclusion Limited, National Company Law Tribunal and such other regulatory approvals as may be required.
Upon the Scheme becoming effective, Bharat Financial Inclusion Limited will stand merged into IndusInd and shareholders of Bharat Financial will receive shares of IndusInd in exchange for shares held by them in Bharat Financial as per the approved Fair Equity Share Exchange Ratio (“Swap Ratio”).
Accordingly, Bharat Financial Inclusion Limited’s shareholders will receive 639 shares of IndusInd for every 1,000 shares of Bharat Financial Inclusion Limited. This implies a premium of 12.6% to Bharat Financial Inclusion Limited over two-week volume weighted price (VWAP).
R. Seshasayee, Chairman, IndusInd Bank, commenting on the announcement said, ''The Board of the Bank believes that the composite scheme of arrangement relating to the merger of these two illustrious institutions will add value to all stakeholders and the Bank.''
P.H. Ravikumar, Chairman, Bharat Financial Inclusion, commenting on the announcement said, ''It is a matter of immense pleasure that Bharat Financial Inclusion Limited has taken today its first steps to be a part of a larger banking family. The transaction will bring immense benefits to Bharat Financial Inclusion’s vast customer base, staff and shareholders. I am particularly thankful to the staff and shareholders who have stood by the company through its turbulent days. I believe the merged entity will harness the immense potential that this underserved customer segment offers.''
Romesh Sobti, MD and CEO of IndusInd Bank, said, ''This Merger is a natural progression of a long-standing relationship and mutual admiration between the two institutions. The combination brings together entities with significant complementary strengths and huge synergistic advantages, making it a win-win proposition for all stakeholders from inception.''
M.R. Rao, MD and CEO, Bharat Financial Inclusion, said, ''Access to savings, deposits and other financial products for all our 6.8 million customers completes our financial inclusion offering. With IndusInd we will have the advantage of deriving the benefit of a large universal bank from day 1. Our network, client base and last-mile customer access to 100,000 villages are unique. We are excited with the possibilities the merger will bring.''
Shares of the bank declined Rs 39.45, or 2.25%, to trade at Rs 1,710.70. The total volume of shares traded was 42,801 at the BSE (9.43 a.m., Monday).
