IndusInd Bank, Bharat Financial gain post signing pact for exploring merger

Shares of IndusInd Bank and Bharat Financial Inclusion (BFIL) were trading 1% higher after the board of directors of respective companies signed agreement for exploring merger.

At 09:25 AM; BFIL was trading nearly 2% higher at Rs 951, after hitting high of Rs 956 in intra-day trade on BSE. IndusInd Bank gained 1.6% to Rs 1,723 in early morning deal, was up almost 1% at Rs 1,706. On comparison, the S&P BSE Sensex was up 0.52% at 31,853.

The board of directors of IndusInd Bank has on Monday, September 11, 2017 entered into a "confidentially, exclusively and standstill agreement with BFIL, IndusInd Bank said in a statement.

The management of IndusInd Bank has been authorized to explore strategic opportunities for the expansion of business of the bank and to assess the viability of strategic partnership, collaboration, or restructuring opportunities from time to time," it added.

The exclusively agreement provides for a mutually agreed exclusively period for due diligence and discussions to evaluate a potential strategic combination, between the bank and BFIL by way of amalgamation through scheme of arrangement, or any other suitable structure.

"The Company has entered into an exclusivity agreement with IndusInd Bank for agreeing to have an exclusive discussion with IndusInd Bank about the proposed potential strategic combination by way of amalgamation through a scheme of arrangement, or any other suitable structure," BFIL said in a statement.

The agreement primarily provides for confidentiality of information / discussion and finalisation of the terms and conditions relating to the proposed transaction with a view to entering into a definitive documentation after the necessary approvals, it added.

Microfinance company Bharat Financial Inclusion (BFIL) has reported a net loss of Rs 37.05 crore for the quarter ended June 2017, impacted by the elevated levels of provisions and the financial costs in the second consecutive quarter (Q). BFIL's net profit stood at Rs 235.91 crore in the same quarter year-on-year.

The micro lender has registered an 11.8 per cent growth in total revenues at Rs 463.08 crore in Q1 as compared to Rs 414.11 crore in the year-ago period.

However, total expenses rose 81.8 per cent to Rs 500.13 crore as the provisions towards loan defaults jumped to Rs 175.89 crore as compared to Rs 12.02 crore in the year-ago period. Also, finance costs increased 28.55 per cent to Rs 174.94 crore from Rs 136.08 crore in the year-ago period.

On a sequential basis, there is a marked decline in net loss as well as the provisioning in Q1. The company's net loss was Rs 234.91 crore in Q4 of the previous financial year (FY). Provisioning and write-offs in Q4FY17 stood at 334.55 crore.

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