Fincare SFB to merge with AU Small Finance Bank in all-share deal

In what could be the first-ever merger in the small finance bank space, Fincare Small Finance Bank is set to merge with AU Small Finance Bank (AU SFB) in an all-share deal. Fincare shareholders will receive 579 shares of AU for every 2,000 shares held.

At present, AU's market capitalisation is Rs 46,000 crore, the highest among small finance banks. The market capitalisation of the merged entity will be slightly over Rs 50,000 crore. The deal values Fincare at around Rs 4,416 crore.

Interestingly, in September this year, Bengaluru-based Fincare received Securities and Exchange Board of India (Sebi) approval for an initial public offering, in which the bank planned to raise Rs 625 crore.

"...the Board of Directors of AU Small Finance Bank Limited, at its meeting held today on October 29, 2023, has, inter alia, considered and approved the scheme of amalgamation for the amalgamation of Fincare Small Finance Bank Limited into and with AU Small Finance Bank," Jaipur-headquartered AU said in a late-evening stock exchange notification.

The merger is subject to approval by the Reserve Bank of India and the Competition Commission of India, AU said.

"As per the Scheme, the 'Appointed Date' shall be February 1, 2024, or such other date as may be fixed mutually by the Transferor Company and the Transferee Company and sanctioned by the RBI," the exchange notification said.

AU, which is the largest among small finance banks, has a balance sheet size of Rs 95,977 crore. The deposit base is Rs 75,743 crore, and gross advances are at Rs 65,029 crore.