Details on the new merger plan of Equitas SFB and Equitas Holding and its benefits
By Malvika Gurung
Investing.com — Microfinance Lender Board Members Equitas Small Finance Bank (NS:) and its holding company/promoter Equitas Holdings (NS:), both individually listed, on Tuesday approved a new scheme for a merger between the two.
In accordance with the merger plan, the holding company Equitas Holdings will fully merge with Equitas SFB, primarily to meet the central bank’s RBI promoter holding standards in the small financial lender.
Shares of both companies rebounded as much as 10% on Tuesday, closing down around 3% during the session.
Under the revised share exchange ratio, each Equitas Holdings shareholder holding 100 shares will receive 231 ESFB shares, higher than the originally proposed offer of 226 ESFB shares, hence the revised exchange ratio. at 231:100.
Equitas Holdings will no longer exist after the merger and ESFB will have 100% public ownership.
The merger is still subject to approvals from RBI, NCLT, the stock exchanges and SEBI, and according to a report by Emkay Research, shareholders of the holding company would get a 71% stake or 79 crores of Equitas SFB shares, valued at Rs 41.8 billion, compared to its current valuation of Rs 36.9 billion.
The report also indicates that the small financial lender could go ahead and apply for a universal banking license, at the end of the merger.