Fincare Small Finance Bank Unlisted Shares

AU Small Finance Bank shares fall over 7% post Fincare merger announcement, quarterly results

CNBC TV 18

2 min read

AU Small Finance Bank announced the acquisition of Fincare Small Finance Bank via exchange filing

Expert Analysis:

The merger hinges on shareholder approval from both companies, regulatory consent from the RBI and India's competition regulator, and a capital infusion of ₹700 crore from Fincare's promoters.
Appointed date of merger: Feb 1, 2024, or mutually agreed & RBI approved.
SWAP Ratio - 579:2000(AU Small Finance Bank will issue 579 shares for every 2,000 Fincare shares)
Combined entity projected values post-merger
- 2.3K+ touchpoints with 98 lakh customers and around 43K employees.
- Combined balance sheet- Rs 1.1+ lakhs Cr
Post-merger, Fincare's existing shareholders will retain a 9.9% stake in AU Small Finance Bank.
AU Small Finance Bank highlights
- Presence - 21 states & 3 union territories
- Quarterly Net Profit grew by 17% (Y-o-Y), and net Interest Income grew by 15% (Y-o-Y)
- Gross NPA stood at 1.91%
- Net NPA rose to 0.66% from June 2023’s 0.55%
- The net interest margin (NIM) stood at a 10-quarter low of 5.5% (projected 5.7% or 5.9% by the management)
- Overall share growth of 6% in 2023
Fincare Small Finance Bank highlights as of 30th September, 2023
- Presence in Andhra Pradesh, Telangana, Tamil Nadu and Karnataka.
- Unlisted but Non-Convertible Debentures listed on the BSE.
- Total assets- Rs 14,777 Cr, Turnover- Rs 1,360 Cr & Net Profit - Rs 219 Cr
- Gross NPA- 1.52% & Net NPA - 0.77%

Takeaways

The merger will lead to increased market share, diversification of risk, products & services & will lead to cost savings & efficiency improvements.
The synergy will also improve the competitive position of the merged entity with a strong financial position through capital infusion.

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