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IndusInd Bank seals $2.4 billion deal to buy Bharat Financial Inclusion

IndusInd will give Bharat Financial's shareholders 639 of its shares for every 1,000 shares



India's Ltd agreed an all-share deal on Saturday to buy microlender Financial Inclusion Ltd for close to 155 billion rupees ($2.4 billion), boosting its presence in microfinance lending and rural

IndusInd will give Financial's shareholders 639 of its shares for every 1,000 shares they own in the microfinance lender, both said in a joint statement.

The deal values Financial at 1118.47 rupees a share, an 11.4 percent premium to the stock's Friday closing price of 1,004 rupees.

"The combination brings together entities with significant complementary strengths and huge synergistic advantages," IndusInd Chief Executive Romesh Sobti said in the statement.

The deal is expected to add value from the start given IndusInd's lower cost of funding among other factors, the said in the statement. They said Financial's distribution network also offered large untapped deposit potential from rural and underserved Indian customers.

Deutsche analysts have previously said the deal would help IndusInd become a dominant player in the microfinance industry and boost its earnings by 2019.

Financial, a for-profit group that focuses on lending small sums to poorer women in rural areas, has 6.8 million borrowers and "last-mile" customer access to 100,000 Indian villages. The combined group will have more than 2,600 branches.

IndusInd, the sixth-largest Indian private sector by assets, announced it had entered exclusive talks with Financial in September.

Morgan Stanley and Arpwood Capital advised while Credit Suisse advised Financial, which was formerly known as SKS Microfinance Ltd.

Shares in IndusInd closed at 1,750.35 rupees on Friday, giving the a market value of more than $16 billion.

First Published: Sat, October 14 2017. 18:09 IST