Stocks

Suryoday Small Finance Bank soars 20% on reports of merger talks

Our Bureau Mumbai | Updated on September 13, 2021

In a regulatory filing, the bank said it’s “unable to comment on media speculation and rumours and it would be inappropriate on our part to do so.”

Suryoday Small Finance Bank (SSFB) shares soared 20 per cent on Monday to close at ₹179.40 apiece against the previous close of ₹149.50 on BSE on reports that the bank and Clix Group are in the merger talks.

This move comes in the backdrop of the proposed amalgamation of Clix Group (comprising Clix Capital Services Pvt Ltd and Clix Finance India Pvt Ltd) with the erstwhile financially distressed Lakshmi Vilas Bank (LVB) falling through last year.

LVB was amalgamated with DBS Bank India Ltd. (DBIL), a wholly-owned subsidiary of DBS Bank Ltd, Singapore, a subsidiary of financial services group, DBS Group Holdings Ltd, in November 2020, following the Government formulated a scheme of amalgamation.

SSFB’s clarification

In a clarification to the exchanges, SSFB, in a regulatory filing, said it is “unable to comment on media speculation and rumours and it would be inappropriate on our part to do so.” The bank got listed on March 26, 2021.

However, SSFB emphasised that “the management of the Bank continues to explore and evaluate various opportunities or associations in the interest of the Bank, as and when considered appropriate, which is always a subject matter of further feasibility studies and the need for requisite consents in accordance to applicable law and other stakeholders.”

Per the clarification, the bank is committed to making necessary disclosure in terms of regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 of various decisions of the Board of Directors/Committees, which would be binding on the bank, subject to the applicable terms and conditions of relevant agreements/ arrangements.

“At present, there is no such decision taken by the Board or any of its Committees, which calls for dissemination of information or disclosure of event in terms of regulation 30 of the Listing Regulations,” the bank said.

Performance

In the first quarter, SSFB’s gross advances increased by 13 per cent year-on-year (YoY) to ₹4.004 crore. Its deposits were up 16 per cent YoY to ₹3,317 crore. Assets under the management of Clix stood at ₹4,265 crore (Consolidated) as of September 30, 2020, according to CARE Ratings.

According to the credit rating agency, Clix Capital Services Pvt Ltd (formerly known as GE Money Financial Services Pvt Ltd) was incorporated in February 1994 as Countrywide Consumer Financial Services Pvt Ltd by GE Group to carry on the business of consumer finance, auto leasing, corporate lending and healthcare equipment financing for GE group products in India.

In March 2016, GE group entered into a management buy-in arrangement with Pramod Bhasin and Anil Chawla, former top executives at GE India, to exit its Indian commercial finance business, per a rating release issued by CARE Ratings in February 2021.

The management buy-in by Bhasin and Chawla was backed by funding from PE firm AION Capital Partners, it added. Following the exit of GE as the shareholder, the name of the company was changed to Clix Capital Services Pvt. Ltd. (Clix Capital) in August 2016.

In September 2016, Clix Finance India Pvt Ltd (formerly known as GE Capital Services India), became a 100 per cent subsidiary of Clix Capital. Clix Finance is engaged in a similar line of business.

Clix commenced lending operations through its housing finance company, Clix Housing Finance Pvt. Ltd since February 2018.

Published on September 13, 2021

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