(Eds: Adding a word in para 1)Mumbai, Oct 14 (PTI) IndusInd Bank today said it willacquire country's second (rpt) second largest microfinanceplayer Bharat Financial Inclusion Ltd (BFIL) and thetransaction is expected to be completed in the next 10 months.
This would be the largest merger and acquisition in themicrofinance space.
Announcing the merger, IndusInd Bank Managing DirectorRomesh Sobti said BFIL's shareholders will receive 639 sharesof IndusInd for every 1,000 shares of the microfinance major.
The merger will be effected through an all-stocktransaction of BFIL into IndusInd through a Composite Schemeof Arrangement, he said.
The merger will not only expand the balancesheet size ofthe bank but also increase the network of outlet.
Post merger, the new entity will have 4,000 branches andoutlets and 16 million customers.
"The merger is expected to be value accretive frominception given IndusInd Bank's lower cost of funds, abilityto monetise excess priority sector lending qualifying assets,efficient capital utilisation and optimal resourceutilisation," he said, adding, the merger would bring down thecost of fund by 3-4 per cent for the combined entity.
With regard to the workforce, he said, all the employeesof BFIL will become part of the bank's family and not a singleemployees would be replaced.
The board at its meeting today approved a compositescheme of arrangement among BFIL, IndusInd Bank and a whollyowned subsidiary of the bank to be incorporated for thepurpose of acquisition.
The scheme is subject to the approval of the Reserve Bankof India, the Competition Commission of India, the Securitiesand Exchange Board of India, among others.
Sobti said, "We have regulatory filings and approvalswhich could be between 2 and 3 months...filing of scheme withNCLT (National Company Law Tribunal) and the whole processwould be 9-10 months."The appointed date for the composite scheme is January 1,2018.
The business correspondent activity would be transferredas a going concern from the bank to a wholly owned subsidiary.
Last month, both the entities had initiated talks toexplore the possibility of merger.
BFIL, formerly SKS Microfinance, had a customer base of68 lakh and loan portfolio of Rs 7,709 crore as of June 30.
However, the microfinance company suffered a loss of Rs37 crore for the quarter to June as against Rs 236 crore inthe same period a year ago. For 2016-17, the company hadrecorded a profit of Rs 290 crore. PTI AA BEN DPMKJ.
This is unedited, unformatted feed from the Press Trust of India wire.