What Does AU Small Finance Bank Gain From Acquiring Fincare SFB?

The announcement by AU Small Finance Bank of acquiring Fincare Small Finance Bank will lead to a wider distribution network and immediate boost to the lender's business.

As of Sept. 30, the merged entity is set to have advances worth Rs 75,570 crore, while its deposits will be Rs 85,196 crore.

The merged entity will have a book value per share of Rs 188.8, compared to Rs 176 for AU SFB. The earnings per share will also be higher at Rs 13.6, compared with Rs 11.8, respectively.

About 200 IT professionals at Fincare SFB are set to join AU SFB, which will allow the lender to achieve scale driven cost synergies over time, it said in an investor presentation.

Apart from this, AU SFB will also benefit from diversification, as over 93% of Fincare SFB's business is in microfinance, where the former is not present. AU SFB will also get additional 806 touchpoints in states like Rajasthan, Gujarat, MP and Maharashtra for the microfinance business.