Bharat Financial signs pact with IndusInd Bank to explore merger

Bharat Financial Inclusion Ltd, India’s first listed micro lender, on Monday said it is in a pact with IndusInd Bank Ltd for exploring a merger.

“Bharat Financial has entered into an exclusivity agreement with IndusInd Bank for agreeing to have an exclusive discussion with IndusInd Bank about the proposed potential strategic combination by way of amalgamation through a scheme of arrangement, or any other suitable structure,” the company said in a notice to the stock exchanges.

“The agreement primarily provides for confidentiality of information/discussion and finalisation of the terms and conditions relating to the proposed transaction with a view to entering into a definitive documentation after the necessary approvals,” the company added.

On September 8, Mint reported that the company is close to finalising a buyer in what could be an all-stock deal. The swap ratio being considered is one share of IndusInd Bank for 1.75 shares of Bharat Financial.

The deal will be subject to due diligence approval of the boards, shareholders, statutory/regulatory and other third-party entities, as required under the applicable laws, the company said.

Morgan Stanley Mauritius Co. Ltd holds a 6.74% stake, while East Bridge Capital Master Fund Ltd, Mathews India Fund, Amansa Holding Pvt. Ltd and BNP Paribas Arbitrage own close to 3% each.

Bharat Financial has 1,408 branches and employs 15,284 people. With 6.8 million customers, it has a loan book of ₹10,971 crore.

The development comes at a time when Bharat Financial is facing stiff competition from banks, both universal and small finance banks.