India's IndusInd Bank seals $2.4 bln deal to buy Bharat Financial

India's IndusInd Bank seals $2.4 bln deal to buy Bharat Financial

As part of the deal, which was approved by the boards of both the entities on Saturday, Bharat Financial's shareholders will receive 639 shares of IndusInd for every 1,000 shares of Bharat Financial Inclusion Limited.

Haitong's Singh said that IndusInd-Bharat Financial deal is earnings per share (EPS) accretive for Indusind Bank. It opened at Rs 1,045 and touched an intraday high and low of Rs 1,045 and Rs 1,018.80 respectively, till around 9.40 am (IST).

The assets and liabilities of Bharat Financial would move to IndusInd's book and the entity would become a subsidiary of the bank, as a business correspondent.

On the BSE, 49,810 shares were traded on the IndusInd Bank's counter so far as against the average daily volumes of 80,797 shares in the past one quarter.

IndusInd Bank Ltd is now trading at Rs 1724.55, down by Rs 25.6 or 1.46% from its previous closing of Rs 1750.15 on the BSE.

IndusInd bank officially notified its shareholders of the approval of the merger with BFIL in September.

"The Board of the Bank believes that the composite scheme of arrangement relating to the merger of these two illustrious institutions will add value to all stakeholders and the Bank", said R. Seshasayee, Chairman, IndusInd Bank.

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The scheme is subject to the approval of the Reserve Bank of India, the Competition Commission of India, the Securities and Exchange Board of India among others, it said.

The wholly owned subsidiary will upon incorporation and pursuant to the composite scheme, be engaged in providing business correspondent services to the bank.

Sobti said none of the over 15,000 BFIL employees will be displaced due to the merger. BFIL fits with the rural banking and microfinance theme of IndusInd's planning cycle-4 strategy, and will provide bank access to best in class micro-lending capabilities and domain expertise in microfinance. They said Bharat Financial's distribution network also offered large untapped deposit potential from rural and underserved Indian customers. The IndusInd bank is the six largest bank in the Indian private sector bank with assets and probably now becoming a dominant player in the microfinance game after venturing with Bharti Financial Inclusion.

The Board of Directors of the two companies approved the scheme at their respective meetings.

Singh also expects return on equity (RoE) for IndusInd Bank to expand by 20-30 bps going ahead.

Bharat Financial had posted a revenue of Rs 1,553 crore a net profit of Rs 289.69 crore for fiscal 2016-17.

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