AU Small Finance Bank board approves merger with Fincare SFB; stock falls 8%
AU Small Finance Bank lost over 8 percent in intra-day deals on Monday, after the lender announced that its board has approved the merger with Fincare Small Finance Bank. The firm will acquire Fincare Small Finance Bank in an all-stock transaction valued at ₹4,411 crore. The move is aimed at extending the bank's footprint in southern India and entering the microfinance sector, it said.
The stock fell as much as 8.5 percent to its day's low of ₹630.90. This is its lowest level in the last 6 months. The stock is now over 20 percent away from its record high of ₹794.95, hit on May 29, 2023.
The stock has gained over 21 percent in the last 1 year and lost around 4 percent in 2023 YTD. In comparison, the Nifty bank index has risen around 5 percent in the last 1 year and is completely flat but in the red this year so far. Under the amalgamation plan, shareholders of Fincare Small Finance Bank will get 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares they own.
Following the merger, existing shareholders of Fincare SFB will approximately have a 9.9 percent stake in AU SFB. “The scheme is subject to the approval of the respective shareholders of the transferor company (Fincare Small Finance Bank Ltd) and transferee company (AU Small Finance Bank Ltd), the Reserve Bank of India (RBI), and the Competition Commission of India (CCI) and a capital infusion of ₹700 crores by the promoters of Fincare SFB," AU SFB said in a regulatory filing late on Sunday evening. It added that the appointed date of the scheme shall be 1 February 2024, or a date as may be fixed mutually by both companies and approved by RBI.
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