Bharat Financial Inclusion shares rallied by more than 2% on Monday morning, after the company entered into an exclusivity contract with IndusInd bank on for a possible merger of the two companies. IndusInd bank and RBL were in contention to acquire Bharat Financial Inclusion, formerly know as SKS Microfinance. On Friday, ET Now reported that Bharat Financial Inclusion prefers IndusInd bank to acquire the company rather than RBL bank. In an interview to CNBC TV18, Deven Choksey, MD of KRChoksey Investment Managers said, “I think we will have to wait and see how this particular integration of business makes sense for IndusInd.” The expert said that the cost of lending for micro-finance companies are unsustainable.
Earlier on Friday, Et Now reported that Bharat Financial Inclusion, India’s first listed micro lender, was close to finalizing a buyer in what is likely to be an all-stock deal. According to the channel, the swap ratio is likely to be set at 1.5 shares of Bharat Financial Inclusions for every one share of IndusInd bank.
The implied price is likely be set at 10-12 per cent premium over the prevailing market price of Bharat Financial Inclusion, ET Now said. Bharat Financial shares were trading at Rs 953.25 on Monday morning up by more than 2% since the previous close. The stock hit Rs 966 last Tuesday, a level last seen on 12 November 2010. The stocks of the company have registered a sharp rise in the last one week with returns of more than 9% in the period.
IndusInd bank shares were trading at Rs 1,708.8 up by more than 0.8%. In an interview to CNBC TV18, Nidhesh Jain, Analyst at Investec Capital Services said that he expects both the stocks to rally post deal. IndusInd bank shares have already returned 54% in the year. In comparison, the BSE Sensex has returned just 19% so far.