Equitas SFB, Equitas Holdings okay scheme of amalgamation

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The boards of Equitas Holdings and its subsidiary Equitas Small Finance Bank (ESFBL) have approved their merger plan, according to regulatory filings.

The boards of directors of the two companies at their respective meetings approved the scheme of amalgamation between Equitas Holdings Ltd (transferor company) and Equitas Small Finance Bank (transferee company), the companies said in separate stock exchange filings.

The scheme proposes the amalgamation of Equitas Holdings into and with Equitas SFB and the dissolution without winding-up of the transferor company pursuant thereto, a filing said.

The amalgamation between the two entities is subject to approvals from RBI, stock exchanges, Sebi as well as the National Company Law Tribunal (NCLT).

The amalgamation between the holding company and the subsidiary SFB is aimed to meet RBI's licensing conditions to bring down the shareholding of the holding company to 40 per cent within a period of five years from the date of commencement of business of the bank, which completed by September 4, 2021.

Further, RBI guidelines also mandates that shares of SFBs should be listed on stock exchanges within a time period of three years from the date the net worth reaches Rs 500 crore.

The lender had already started operations with net worth of over Rs 500 crore and complied with listing guideline by way of initial public offering in November 2020.

RBI guidelines also stipulates that a promoter of an SFB can exit after completing lock-in period of five years, subject to regulatory approvals.

As per the scheme of amalgamation, each of the equity shareholders of the transferor company (Equitas Holdings) will be allotted 231 equity shares for every 100 shares of the transferee company (Equitas SFB).

"Considering that transferor company is a company with no identifiable promoter and all its shareholders are public shareholders, issue of shares under the scheme would result in increase of public shareholding in the bank from 25.41 per cent (as on date) to 100 per cent," Equitas SFB said in the filing.

Equitas SFB shares closed 0.93 per cent up at Rs 53 apiece on BSE while Equitas Holdings ended 1.24 per cent lower at Rs 107.90.