IndusInd Bank to acquire microlender Bharat Financial for Rs15,500 cr

Hinduja group promoted IndusInd Bank Ltd and microlender Bharat Financial Inclusion Ltd (BFIL) have agreed to merge, in what the two lenders say, would bring in synergies and reduce costs.

IndusInd Bank Ltd on Saturday signed an all-share deal to buy Bharat Financial Inclusion Ltd for close to Rs15,500 crore ($2.4 billion), boosting its presence in microfinance lending and rural banking.

IndusInd will give Bharat Financial's shareholders 639 of its shares for every 1,000 shares they own in the microfinance lender, according to a joint statement issued by the companies.

Based on the swap ratio announced by the two companies, BFIL shareholders will get 0.639 share of IndusInd Bank for every one share they own in BFIL.

The deal values Bharat Financial at Rs1,118.47 a share, an 11.4 per cent premium to the stock's Friday closing price of Rs1,004.

''The combination brings together entities with significant complementary strengths and huge synergistic advantages,'' the release quoted IndusInd chief executive Romesh Sobti as saying.

The merger is expected to add value from the start given IndusInd's lower cost of funding and Bharat Financial's distribution network, which also offered large untapped deposit potential from rural and underserved customers.

Bharat Financial, a for-profit group that focuses on lending small sums to poorer women in rural areas, has 6.8 million borrowers and ''last-mile'' customer access to 100,000 Indian villages. The combined group will have more than 2,600 branches.

IndusInd, the sixth-largest Indian private sector bank by assets, announced it had entered exclusive talks with Bharat Financial in September.

Morgan Stanley and Arpwood Capital advised IndusInd Bank while Credit Suisse advised Bharat Financial, which was formerly known as SKS Microfinance Ltd.

Shares in IndusInd closed at Rs1,750.35 on Friday, giving the bank a market value of more than Rs10,000 crore.