Equitas Holdings, Equitas SFB rally on amalgamation scheme approval

Shares of Equitas Holdings (Rs 135.70) and Equitas Small Finance Bank (Rs 68.70) surged 9 per cent each on the BSE in the intra-day trade on Tuesday after their respective boards approved the amalgamation scheme of the two companies. The stock of Equitas Holdings (Rs 138.40) and Equitas SFB (Rs 76.75) had hit their respective 52-week highs on July 12, 2021.

As per the scheme, Equitas SFB will issue 226 shares to holding company’s shareholders for every 100 they held. The plan also involves "dissolution without winding-up" of Equitas Holdings after its merger with Equitas SFB. The merger, effective November 1 if all approvals are received, is to comply with an Reserve Bank of India (RBI) directive for promoter Equitas Holdings to reduce its stake in the small finance bank to below 40 per cent.

Earlier this month, Equitas SFB had received RBI’s nod to apply for amalgamation of the promoter into itself. The intent of the amalgamation is to comply with the RBI norms on small finance banks, mandating the promoter to reduce the stake in the subsidiary to 40 per cent within five years of commencement of operations by the SFB. As of June 30, 2021, Equitas Holdings held 81.75 per cent stake in Equitas SFB.

Equitas Holdings is a non-deposit taking, systemically important core investment company. The company’s operations and activities are limited to investing in and providing loans to group companies.

Equitas SFB operates as a small finance bank engaged in retail banking business with focus on micro finance, commercial vehicle finance, home finance, loan against-property finance, corporate finance, and providing financing solutions for individuals and micro and small enterprises (MSEs) that are underserved by formal financing channels while providing a comprehensive banking and digital platform for all.