That means there will be only one company with the name of Equitas SFB(or some different name)?
ESFB will absorb EH, so there wonât be EH holdings anymore. Whoever holds shares of EH will receive ESFB shares.
ESFB remains in the same name
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Swap ratio is 100:226, where as equitas holdings is holding shares in Equitas small finance bank in the ratio 100:273.
Itâs a massive 17% discount (20% upside loss) for Equitas holdings shareholders.[ Which will partially be covered due to BV increase for bank shareholder]
Interested to see how equitas holdings shareholders will vote on this.
For Equitas bank shareholders overnight book value will increase by some 17%.
Seems like a win win, but EHL could have done better job of negotiating a better swap ratio.
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Whatâs the source for this info ??
Wanted to read about this in detail.
swap ratio does not matter much in this case as hold co owns high stake i.e. 82%
do the calculation - 16.6% discount to 82% shareholders means roughly 13.6% (82% * 16.6%) shares getting extinguished from Equitas Small Bank.
So if this goes through - 13.6% bank shares get reduced. So ideally keeping valuations same - bank share price should rise by 13.6%
This means for hold co shareholders - they loose 16.6% shares but gain 13.6% in rise in bank share price
So net net 16.6 - 13.6 = 3% net discount and not 16.6% discount as it optically looks
No holding in any of these names
Ritesh
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and if this goes through then it can become the trend for Ujjivan and IDFC holdco - Ujjivan has 83% so it will be fine with minimal damage. IDFC has most to loose at only has 40% stake in IDFC bank
thanks
Ritesh
Yeah I agree with your thinking.
SFB has 114.23 crore shares outstanding out of which 93.3 cr are owned by holding company.
After amalgamation, 93.3 cr shares will get canceled and 77.2 cr shares will get issued to holding company shareholders.
So total shares outstanding from SFB will go from 114.23 cr â 98.1 cr
As @rdhoot pointed out, share price should increase by ~15% for the SFB. Minority holders of the SFB benefit slightly but not too bad for holding company shareholders as well.
Promoter sold shares in the open market. What will happen to sold amount?
there are no promoters in Equitas Holdings. CDC is an early investor⌠sometimes selling can depend on fund dynamics rather than undelying portfolio company fundamentals⌠while i do not know why CDC would sell⌠i think it is not materialâŚ
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Provision is increased for ESB: https://www.bseindia.com/xml-data/corpfiling/AttachLive/d2a422a4-6543-4959-8ced-abbd68cd70f1.pdf
Linking a related post on Merger.
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So fundamental question, is there any arbitrage opportunity to buy Equitas Holding and then gain post amalgamation through SFB?
We can not predict market situation during the merger. If you would like to buy SFB for long term then buy Equitas Holding. You will get 2.26 stock of SFB for each Holding stock. As per the current price, holding comapny is cheaper then SFB.
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When is the record date to hold to get ESFB shares. If I am holding EQUITAS HOLDINGS?
the merger is some time awayâŚ
they need to apply to RBI for approval - though they have received informal approval, they need it on record.
follow NCLT process for merger
SEBI approval
my guess is that it should be effective last quarter of AY 2022
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they have a subsidary which helps match truck capacity with demand, they are selling it as per terms of merger with Equitas Bank, as bank cannot hold any other business
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Thanks for the info, do you know from where can I read more about it? I am not able to find about it in their AR.