Lenders in tie-up talks

MUMBAI: India’s IndusInd Bank Ltd has entered into exclusive talks to acquire microlender Bharat Financial Inclusion Ltd, in a deal that will help the private sector bank to expand its consumer business.

IndusInd and Bharat Financial have entered into exclusive talks for a potential strategic combination, both sides said in separate statements yesterday, 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 is valued at more than $2 billion.

Bharat Financial started operating in 1998, when it was called SKS Microfinance Ltd. The business was modeled after Nobel Laureate Muhammad Yunus’s pioneering Grameen Bank in Bangladesh.

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