Bharat Financial Inclusion, IndusInd Bank stocks close higher on reports of likely merger

The Bharat Financial Inclusion stock closed higher on Monday amid reports that IndusInd Bank has entered into exclusive talks to acquire the non-banking finance company, in a deal that will help the private sector bank to expand its consumer business.

At 11:17 am, the Bharat Financial Inclusion (formerly known as SKS Microfinance) stock was trading 2.69 per cent or 25 points higher at 961.15 level on the BSE. The IndusInd bank stock was trading 1.21 percent or 20 points higher at 1716.95 level.

IndusInd closed 5.56 percent or 94.25 points higher to 1790.65 level.

The Bharat Financial Inclusion stock too hit a fresh 52-week high of Rs 979 on the BSE. It rose 3.34 percent or 31 .30 points higher to 967.25 level on the BSE.

IndusInd and Bharat Financial have entered into exclusive talks for a potential strategic combination, both sides said in separate statements on Monday, without providing details on what a potential deal would look like or how long they would pursue the talks.

The two financial firms had long been speculated to be interested in a deal, with analysts saying previously it could come in the form of a share swap.

IndusInd Bank is India's sixth-largest private sector lender by assets and has a market value of about $16 billion, while Bharat Financial Inclusion, formerly known as SKS Microfinance Ltd, is valued at more than $2 billion.

"Of late (IndusInd Bank) has been talking about increasing the proportion of their consumer business. This deal would help it achieve that," said Nitin Aggarwal, an analyst with brokerage Antique Stockbroking.

Credit Suisse said in a note last week Bharat Financial was one of the best-capitalised microfinance players in the market, one that was gaining market share.

(With Reuters inputs)