Details of the Deal (1/3)

Indusind Bank Bharat Financial Inclusion Ltd.

Conceived by Srichand P Hinduja, a leading NRI businessman and head of Founded by Vikram Akula in 1997 as SKS Microfinance, it is the country’s
Conceived
Hinduja by Srichand
Group, the bank Pstarted
Hinduja, a leading
operations in NRI
1994.businessman and head
The bank’s name was of Founded
second by micro-financer.
largest Vikram Akula in 1997became
It also as SKSthe Microfinance, it publicly-listed
country’s first is the country’s
Hinduja
derived from Group, the Valley
the Indus bank civilization.
started operations in 1994. The bank’s name was second largest
microfinance micro-financer.
company in 2010. It also became the country’s first publicly-listed
• derived
Bank has 2.5 crore customers,civilization.
from the Indus Valley over 5,000 distribution points, 2500+ ATMs microfinance company in 2010. crisis in its largest market of Andhra Pradesh
In the past, SKS faced a repayment
•andBank has2,000
nearly 2.5 crore customers,
branches overcountry.
across the 5,000 distribution points, 2500+ ATMs Inathe
and past, SKS
corporate faced
battle a repayment
over leadershipcrisis in its
resulted thelargest
exit ofmarket
founderofVikram
AndhraAkula.
Pradesh
• The bank aims a loan mix towards 60:40,country.
and nearly 2,000 branches across the
Others
and a corporate battle over leadership resulted the exitOthersof founder Vikram Akula.
•forThe bank
retail andaims a loan mix
corporate, towards 60:40,
respectively. Mutual 3% • Presently, 1,408 branches 3%
Funds Mutual
for retail and corporate, respectively. • Presently,
• Spread 1,408 branches
in 17 states Funds
12% Foreign
Promote Institutio • •16000+
Spreademployees
in 17 states 23%
Promote
r ns • 16000+ employees r
45,405 Cr 495.19 15% 52% 12,597 Cr 301.23 2% Foreign
Public Instituti
Market Cap(INR) Book Value (INR) Public Market Cap(INR) Book Value (INR) Sharehol ons
Sharehol ding 61%
ding 11%
13.17 45.56 19% 12.79 70.20
P/E Ratio EPS P/E Ratio EPS
Shareholding Pattern Shareholding Pattern

IBL and BFIL Board

authorized the respective Date of Merger RBI approval for
Sep
Sep Mar
Mar July
senior managements to 2017 Announcement setting up of a July
2017 2018
2018 2019
2019
evaluate various organic and (Oct 14, 2017) WOS (June 08,
inorganic strategic growth 2018)
opportunities

Appointment of Application to the

IndusInd Bank-Bharat
advisors for legal, Oct RBI for setting-up of June
Oct June Financial merger
2016
2016 financial, tax and 2017
2017 a Wholly Owned 2018
2018 effective from July 4.,
operational Subsidiary (WOS)
2019
diligence (Mar 15, 2018)
 Details of the Deal (2/3)
Deal Size Rs 15,486 crore , all stock merger
Loan Mix

• Bharat Financials' stock closed at Rs 1,003.45 a piece Vehicle Finance

Stock Price • IndusInd Bank shares had closed at Rs 1,750.15 on the day of 32%
merger announcement
Pre Corporate
Swap Ratio • BFIL shareholders to receive 639 IBL shares for every 1,000 BFIL Merger 51%
shares (12.6% premium to Bharat Financial shareholders over 2- Banking
week volume weighted average ) 4% MFI
Business
3%
Credit Card
10%

Market Response to the Merger Announcement

shares of Bharat Financial Inclusion rose Rs 967.25 on BSE.
shares of
Shares of Bharat Financial
IndusInd BankInclusion rose to
advanced Rs 967.25 on BSE.
Rs 1,790.65. Vehicle Finance
Shares of IndusInd Bank advanced to Rs 1,790.65. 30%

Corporate
5.56% 3.34% Post
48%
Merger
Bharat Financial Banking
IndusInd Bank Share 4%
Inclusion Share Business MFI
Growth Growth 9%
Credit Card
9%
* Source: Motilal Oswal Report, IndusInd Bank Merger Update , Economic Times

We think the merger is a positive one for
IIB as it enhances the overall growth and
profitability profile and provides significant
synergies over 1-2 years.
- JP Morgan
IIB announces merger with BHAFIN; Gains The three key positives for IIB will come
strong edge in rural distribution; synergies from scope to reduce its cost of funds, earn
to further boost earnings . from surplus priority loans & boost capital .
- Motilal Oswal - CLSA
 Details of the Deal (3/3)
Transaction Structure
Merged BFIL assets and liabilities to merge into IBL’s assets and liabilities.
Structure IBL Promoters BFIL
• BFIL operations to be part of IFIL, a wholly owned subsidiary of IBL. 2 Shareholders
• Subsidiary to act as a Business Correspondent of IBL
Pref Issue Issue of shares by
Board • No change in the Board of IndusInd Bank of Share
4
IBL to
• MFI Advisory Committee to be set up for the Wholly Owned Subsidiary Warrants shareholders of
Employees • Continuity of all BFIL Management and Employees in current assignments BFIL
IBL 1 BFIL
Merger of
Subsidiaris BFIL with
ation of 3 IFL
Operations

Merged Entity to have IFIL, a wholly

owned subsidiary
4,000+ branches and
outlets 1. BFIL to merge into IBL under a Scheme of
Arrangement

Geographic Reach Post Merger 2. BFIL shareholders to receive IBL shares as

consideration
BFIL Presence: 1,708 strong
MFIBFIL Presence: 1,708 strong
Network 3. IBL to transfer the employees and the undertaking in
MFI Network relation to the Business Correspondent
Vehicle Finance Presence: operations into IndusInd Financial InclusionLimited*
932 Vehicle Finance Presence:
Outlets (excluding Dealer (IFIL) (a wholly owned subsidiary of IBL), making it a
932 Outlets (excluding Dealer
Points) captive Business Correspondent
Points)
IBL Presence : 1,466 Branches 4. Preferential Issuance of share warrants to the IBL
IBL Presence : 1,466 Branches Promoters. The Promoters shareholding would be
(includes 250 rural branches)
(includes 250 rural branches) retained at ~15%
* Source: Motilal Oswal Report, IndusInd Bank Merger Update