IndusInd Bank, India's sixth-biggest private sector lender by assets, today said that it has entered into an exclusive agreement with microlender Bharat Financial Inclusion, to explore potential merger opportunity between the company and Bharat Financial Inclusion. The deal if goes through will help boost the consumer business of IndusInd Bank, analysts say. Shares of Bharat Financial Inclusion hit their fresh 52-week high at Rs 979 before closing at Rs 967.25 with a gain of 3.34 per cent on the BSE. Shares of IndusInd Bank hit their fresh 52-week high at Rs 1802.65 before closing with a gain of 5.56 per cent at Rs 1,790.65 on the BSE.
Here are 5 things to know about this development:
1) IndusInd Bank is the sixth biggest private sector lender in India with a market value of over Rs 1 lakh crore. In FY17, retail banking contributed nearly 50 per cent to its total revenue and has grown by 20 per cent over FY16. In the absence of credit demand from corporate side, private lenders have increased focus on retail side, which is witnessing robust growth, analysts say.
2) Acquisition of Bharat Financial Inclusion will give further boost to its retail business, say analysts. "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.
3) Bharat Financial Inclusion is the largest microlender in India in the listed space with a market value of Rs 13,400 crore.
5) 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. (With agency inputs)