Private lender IndusInd Bank is all set to take over micro finance brand Bharat Financial Inclusion and both sides have also entered into an exclusivity agreement for culminating the deal.
Reportedly, the deal will help the bank in acquiring greater access to the rural economy and prospects to explore to earn higher returns from bottom-of-the-pyramid customers.
Credit Suisse and Morgan Stanley are advising both the brands with the merger. Post the acquisition, the micro lender founded by Vikram Akula would enable access to 6.8 million customers.
“The synergy of the merger is underestimated,” said Romesh Sobti, Chief Executive Officer, IndusInd Bank.
“The merger will give priority sector benefits, lower cost of fund by about 100 basis points, boost liability side of business of the bank, and provide cross-sell opportunities,” said Sobti.
Under Sobti’s leadership, the merger would help IndusInd Bank to expand by around 1,400 Bharat Financial branches. As per the projection, the bank’s assets would expand by nearly by Rs 10,000 crore to Rs 1.26 lakh crore as compared to June 2017 data.
“We have a few more weeks to work on the definitive agreement. The embedded value of the bank’s business will gain from the merger,” Sobti said.
