IndusInd Bank dropped 1.65% to Rs 1,721.25 at 10:05 IST on BSE after the bank said that its board of directors approved merger with Bharat Financial Inclusion.
The announcement was made on Saturday, 14 October 2017.Shares of Bharat Financial Inclusion rose 2.7% to Rs 1,030.50.
Meanwhile, the S&P BSE Sensex was up 206.15 points or 0.64% at 32,638.84.
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. The stock had hit a high of Rs 1,746 and a low of Rs 1,700.10 so far during the day. The stock had hit a record high of Rs 1,818 on 12 September 2017. The stock had hit a 52-week low of Rs 1,037.85 on 24 November 2016.
The stock had underperformed the market over the past one month till 13 October 2017, gaining 0.45% compared with the Sensex's 0.77% gains. The stock had, however, outperformed the market over the past one quarter, gaining 10.75% as against the Sensex's 1.23% rise. The scrip had also outperformed the market over the past one year, advancing 43.62% as against the Sensex's 17.33% rise.
The large-cap bank has equity capital of Rs 598.87 crore. Face value per share is Rs 10.
IndusInd Bank announced that the board of directors of the bank and Bharat Financial Inclusion (BFIL) at their respective meeting held on Saturday, 14 October 2017, approved a merger of the two entities to create a stronger and more sustainable platform for financial inclusion.
The merger will be effected through an all-stock transaction of BFIL into IndusInd through a composite scheme of arrangement. BFIL shareholders will receive 639 shares of IndusInd Bank for every 1,000 shares of BFIL. This implies a premium of 12.6% to BFIL's over two-week volume weighted price, bank said.
The scheme contemplates merger of BFIL with IndusInd and simultaneous transfer of BFIL's business correspondent operations into a wholly owned subsidiary of IndusInd, which shall be incorporated after receipt o requisite regulatory approvals (BC-WOS). All the assets and liabilities originated by the BC-WOS will be booked into the balance sheet of IndusInd. As the integral part of the scheme, there shall be a preferential allotment of warrants to the promoters of IndusInd in accordance with the applicable RBI and SEBI guidelines as an anti-dilutive measure. The composite scheme is subject to the receipt of approval from the RBI and the other statutory and regulatory approvals.
The wholly owned subsidiary will upon incorporation and pursuant to the composite scheme, be engaged in providing business correspondent services to the bank.
All the employees of BFIL will become part of IndusInd. 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. BFIL's distribution network offers large untapped deposit potential from rural and underserved customers as also for their emerging banking needs.
Bharat Financial Inclusion is among the largest microfinance companies in India. BFIL has total assets of Rs 10170 crore and net worth of Rs 2420 crore as on 30 June 2017.
In September this year, the board of the bank had approved entering into a confidentiality, exclusivity and standstill agreement with BFIL to evaluate a potential strategic combination between the bank and BFIL through a scheme of arrangement.
IndusInd Bank's net profit rose 25% to Rs 880.10 crore on 21.1% rise in total income to Rs 5395.92 crore in Q2 September 2017 over Q2 September 2016.
IndusInd Bank is one of the leading private sector banks in India.
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