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ICICI Securities Report
Equitas Small Finance Bank Ltd., via its exchange filing on July 20, 2021, intimated that its Board has approved an amalgamation scheme between Equitas Holdings Ltd. (promoter of Equitas SFB) and Equitas SFB and their respective shareholders.
The proposed share swap ratio (issuance of 226 shares of Equitas Small Finance Bank for 100 shares in Equitas Holding) is book value accretive for Equitas SFB.
Key rationale for the proposed merger is to meet minimum public shareholding requirements by Equitas SFB.
As per licensing guidelines, Equitas SFB is required to bring down its promoter holding more than 40% within five years of commencing small finance bank operations (it completes five years in September 2021).
Current promoter holding stands at ~82% and, post the successful completion of merger, public holding will increase to 100% given that Equitas Holding is not backed by an identifiable promoter.
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