What sparked a rally in Equitas Holdings and Equitas SFB today

NEW DELHI: Shares of Equitas Holdings and Equitas Small Finance Bank (SFB) jumped as much as 9 per cent each during early trade on Tuesday after it announced an amalgamation scheme.

The share exchange ratio would result into each shareholder of the transferor company, Equitas Holdings, getting 226 equity shares of the transferee company, Equitas SFB, for every 100 shares held by them in the holding company.

EHL (transferor company) is the promoter or the holding company of ESFB (transferee company).

Shares of Equitas holdings jumped 9 per cent to Rs 135.70 on Tuesday. It gave up some gains to trade at Rs 134.10 at 9.50 am. It settled at Rs 124.45 on Monday.

Similarly, Equitas Small Finance Bank advanced 9 per cent to Rs 68.70. It had settled at Rs 63.15 in the previous session. BSE Sensex was trading 73 points, or 0.14 per cent, higher at 52,925.27 at the same time.

Earlier this month, Equitas SFB had received the nod from banking regulator Reserve Bank of India to apply for amalgamation of the promoter into itself.

The intent of the amalgamation is to comply with 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 Small Finance Bank (ESFB).

Equitas holdings had a turnover of Rs 177.45 crore and total assets of Rs 1,787 crore as of March 31, 2021. Equitas SFB had a turnover of Rs 3,612.47 crore, while its total assets were worth over Rs 24,715.22 crore.

Sebi-registered merchant banker JM Financial provided a fairness opinion on July 26, 2021 on the share exchange ratio for the shareholders of the company, they said.