DSP Mutual Fund plans to acquire 9.99% stake in Equitas SFB, gets RBI nod

“We wish to inform you that the Bank has received a communication from RBI dated November 16, 2022, that it has approved the acquisition of up to 9.99% paid up by M/s DSP Investment Managers Private Limited (DSPIM) – DSP Augmentation of equity capital of the Bank through schemes of mutual fund (DSPMF),” the company informed in an exchange filing.

The proposed acquisition of the shares by DSPIM will be consequent to the Scheme of Amalgamation of Equitas Holdings Limited with the Bank becoming effective.

In March this year, the Board of Equitas SFB approved a new scheme of amalgamation between Equitas SFB and the promoter/holdco, Equitas Holdings Limited (both listed entities), primarily to meet the promoter holding norms in the ESFB.

Notably, the HOLDCO structure was voluntarily created to meet RBI’s norms with regard to promoter holdings in Equitas SFB. The Reserve Bank of India (RBI) had also given the promoters an exit option after completing a lock-in period of five years after incorporation as a small finance bank. Post amalgamation, Holdco will cease to exist and ESFB will hold 100% public shareholding.

For the quarter ended September 2022, Equitas SFB reports more than two-fold growth in its net profit 116 crore, on a healthy growth in loan disbursements as compared to Rs. 41 crore in the year-ago period. Net interest income (NII) increased 610 crores as against 484 crore in the same period of FY22 while the Net Interest Margin (NIM) stood at 9% during the quarter.

The lender said its disbursements grew by 22% during Q2 FY23 3,845 crore from a year ago. Q2 was an advance as in FY23 22,779 crore, up 20% from the same quarter a year ago. Gross non-performing assets (NPAs) declined to 3.82% from 3.95% in the first quarter of FY23.