Fincare Small Finance Bank to be acquired by AU Small Finance Bank through a share exchange

30 Oct 2023 , 01:48 PM

With regulatory permissions pending, AU Small Finance Bank is prepared to purchase Fincare Small Finance Bank in an all-share transaction and merge it with itself.

According to the terms of their agreement, for every 2,000 shares held, owners of Fincare Small Finance Bank will receive 579 equity shares of AU Small Finance Bank. The merger would go into effect on February 1, 2024, according per a regulatory filing made late on Sunday to stock exchanges.

The acquisition will make it easier for AU, which has its headquarters in Jaipur, to enter the microfinance industry. AU was the only asset-backed lender without a history in microfinance to be granted one of ten small finance bank licences that the Reserve Bank of India offered in an effort to promote financial inclusion in 2015. Of the remaining nine, a local area bank received one license and microfinance lenders received the other eight.

Additionally, the transaction is the first attempt at consolidation between two micro financing banks. It will support AU’s southern market expansion.

In 2003, AU began operating as a non-bank car financier out of Jaipur. At the end of September, AU’s gross advances were Rs 65,029 crore, of which 95% were secured loan assets and around one-third were auto loans. In April 2017, AU commenced its banking operations.

At the end of June, Fincare, a Bengaluru-based company, had a gross loan portfolio worth Rs 7600 crore, of which slightly more than three-fourths came from microfinance. Future Financial Services and Disha Microfin, two NBFC-MFIs, merged to form FIncare. Disha was granted the last small finance bank licence in May 2017.

For feedback and suggestions, write to us at [e-mail]