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AU SFB eyes Fincare SFB for acquisition
September 13, 2023
AU Small Finance Bank Limited (NSEI: AUBANK) is said to be in preliminary talks to acquire the business of Fincare Small Finance Bank Limited. According to highly placed sources, the development is quite recent, and discussions are at nascent stages. If talks fructify, it would be the first deal in the small finance bank space symbolising consolidation in the industry.
AU is the largest SFB with a loan book of INR 584,210 million as on March 31, 2023, while Fincare is the seventh largest small finance bank with a loan book of INR 87,000 million as on March 31, 2023. Around 60% of Fincare assets are microfinance loans and the bank is said to have strong presence in the south Indian market. Fincare refiled its IPO documents in May and is waiting for a go-ahead from SEBI.
Deal advantages: Sources in know say AU SFB has been exploring markets such as Andhra Pradesh, Telangana, Karnataka and Kerala for expansion. Organic diversification may take a long time for the bank and acquiring a lender with dominance in these market makes sense, said a highly placed source who didn’t want to be named.
Emails sent to Fincare SFBs remained unanswered till press time. This news is speculative in nature. The bank, in the normal course of its business, explores various opportunities including tie-ups and partnership, strategic Investments, portfolio buyouts etc.
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