Bharat Financial Inclusion Limited

Bharat Financial Inclusion — Merger or Acquisition (November 2018)

30 slides from Bharat Financial Inclusion's merger presentation, Nov 10, 2018

  1. Slide 1: Cover letter to stock exchanges: Presentation on Update on Merger

    November 10, 2018 The General Manager The Vice President, Listing Department Department of Corporate Services - Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza Phiroze Jeejeebhoy Towers Bandra Kurla Complex Dalal Street Bandra (East) Mumbai 400 001 Mumbai 400 0

  2. Slide 2: IndusInd Bank and Bharat Financial Inclusion Merger Update

    IndusInd Bank and Bharat Financial Inclusion Merger Update Building A Sustainable Platform for Financing Livelihoods November 10, 2018

  3. Slide 3: Agenda

    Agenda 1 Merger Status Summary 2 Transaction Structure 3 Merger Rationale & Synergies 4 Update on Approvals 5 IBL & BFIL Performance since Merger Announcement 6 Fact Sheet 2

  4. Slide 4: 1. Merger Status Summary

    1. Merger Status Summary

  5. Slide 5: Corporate Governance Pre-Announcement

    Corporate Governance Pre-Announcement July 01, 2016 - IBL September 11, 2017 Sep-Oct 2017 October 14, 2017 May 01, 2017 - BFIL Board Authorization to Exclusivity Due Diligence, Evaluate Strategic Announcement for Negotiations, Board Approval Opportunities IBL & BFIL Merger Documentation  IBL and BF

  6. Slide 6: Approval Process and Indicative Timelines

    Approval Process and Indicative Timelines Regulatory Filings NCLT Filings & ROC Filings & Board Approval & Approvals Approval Share Issuance  Valuation / Swap Ratio  RBI  Filing of Scheme  Final approval of RBI  Approval of ‘Scheme’, matters  CCI  NCLT approval: Shareholders  ROC Filing ther

  7. Slide 7: 2. Transaction Structure

    2. Transaction Structure

  8. Slide 8: Transaction Structure

    Transaction Structure Issue of shares by IBL to shareholders BFIL 1. BFIL to merge into IBL under a Scheme of IBL Promoters of BFIL Shareholders Arrangement 2 2. BFIL shareholders to receive IBL shares as 4 consideration Pref Issue of Merger of BFIL Share Warrants into IBL 3. IBL to transfer the emp

  9. Slide 9: Transaction Structure

    Transaction Structure • BFIL assets and liabilities to merge into IBL’s assets and liabilities. Resultant Structure • BFIL operations to be part of IFIL, a wholly owned subsidiary of IBL. • Subsidiary to act as a Business Correspondent of IBL Swap Ratio • BFIL shareholders to receive 639 IBL shares

  10. Slide 10: 3. Merger Rationale and Synergies

    3. Merger Rationale and Synergies

  11. Slide 11: Culmination of Existing Long Standing Relationship

    Culmination of Existing Long Standing Relationship Business Correspondent 314 BFIL Branches Rs 2,772 cr BC (BC) for Over 6 years Exclusive to IBL Outstanding Compatible Culture Partnership for 2- Savings & Recurring Rural Distribution Wheeler & Home Integrated CRM Platform Accounts for Borrowers Ser

  12. Slide 12: Creates Large and Complementary Network

    Creates Large and Complementary Network 5 Jammu and Kashmir Himachal Geographic Reach as of 30th September 2018 Punjab 2 11 Pradesh 31 Chandigarh 58 111 13 11 10 Haryana 38 109 Uttarakhand IBL Presence : 1,466 Branches (includes 250 rural branches) New Delhi 48 2 Arunachal Pradesh 50 17 109 117 1 Si

  13. Slide 13: Financial Inclusion Pilots Showing Encouraging Results

    Financial Inclusion Pilots Showing Encouraging Results Savings and Recurring Deposits • 5,10,000+ Savings accounts and 2,70,000+ Recurring deposit accounts opened in 314 BC branches in Q2FY19 Retail Distribution and Service Points (RDSP) • Pilot is rolled out in ~ 1,500 locations • Services offered

  14. Slide 14: Increasing Sophistication of Financial Products

    IBL & BFIL together bridging the Financial Inclusion gap 1 Basic Banking Microfinance, Microinsurance, Savings Bank Services Accounts., Recurring Deposits Integrated CRM Technology Platform IBL’s Banking Increasing Sophistication of Financial Products Capabilities 2 Additional Services Mobile Bankin

  15. Slide 15: Saving Products Create Multiple Opportunities

    Saving Products Create Multiple Opportunities Enhanced relationship with customers Strong Liability Franchise Lower NPA % Savings Bank Loan products Higher based on customer Accounts Savings pattern retention Lower Cost to Recurring Income % Deposits 8.3 Million Members spread across ~100,000 Fixed

  16. Slide 16: Key Synergy Estimates

    Key Synergy Estimates Lower Cost of Funds Reduction of 2%-3% 100% Eligible as PSL Priority Sector Loans Fee income of 0.75%-1.5% on excess Capital Release 75% Risk Weight in Bank Liabilities Potential to penetrate >50% Customer Base 2-Wheeler Financing Home Improvement Loans Ancillary Products Fixed

  17. Slide 17: Creating Domain Expertise in Microfinance

    Creating Domain Expertise in Microfinance Furthering PC 4 Strategic Theme of “Rural Banking and Microfinance” For IBL For BFIL  Creates “Scale with Profitability” - Faster growth and  Provides ready banking platform to drive operating higher profitability vs IBL synergy  Provides access to best-i

  18. Slide 18: Positive Market Reception

    Positive Market Reception  CLSA – Acquisition should be earnings accretive and boost capital The three key positives for IIB will come from scope to reduce its cost of funds, earn from surplus priority loans & boost capital as BHAFIN’s Tier I CAR is 33%, & the risk-weight for micro-loans is lower f

  19. Slide 19: 4. Update on Approvals

    4. Update on Approvals

  20. Slide 20: Received All Regulatory Approvals Without Any Adverse Comments

    Received All Regulatory Approvals Without Any Adverse Comments Application to the RBI for Application to the CCI for CCI Approval for the Merger Announcement the Scheme Approval Combination Approval Combination (Oct 14, 2017) (Nov 06, 2017) (Nov 15, 2017) (Dec 19, 2017) Application to the RBI for Ap

  21. Slide 21: NCLT Process Update

    NCLT Process Update  The Composite Scheme of Arrangement was filed with the Hon’ble National Company Law Tribunal, Mumbai on August 24, 2018 to seek requisite directions under Section 230-232 of the Companies Act, 2013  The NCLT issued directive on October 31, 2018 to hold meeting of the equity sh

  22. Slide 22: 5. IBL & BFIL Performance since Merger Announcement

    5. IBL & BFIL Performance since Merger Announcement

  23. Slide 23: Key Pro-forma Parameters

    Key Pro-forma Parameters IBL BFIL IBL + BFIL Customers 13.0mn 6.5mn (1) 19.5mn Employees 26,341 18,277 44,618 Loans (Rs cr) 1,63,144 10,914 (2) 1,74,058 Networth (Rs cr) 25,005 3,602 28,607 (3) Total Assets (Rs cr) 2,48,319 12,001 2,60,320 CRAR 14.28% 31.3% - Data as of September 30, 2018 (1) Exclud

  24. Slide 24: Key Vectors Stable or Improved Since Merger Announcement

    Key Vectors Stable or Improved Since Merger Announcement IndusInd Bank Limited Net Interest Margin (NIM) RoA RoE 4.00% 3.99% 16.48% 16.96% 16.56% 17.25% 17.63% * 3.97% 3.92% 1.90% 1.96% 1.91% 1.89%* 3.84% 1.86% Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q2FY18 Q3FY18 Q4FY1

  25. Slide 25: Key Vectors Stable or Improved Since Merger Announcement

    Key Vectors Stable or Improved Since Merger Announcement Bharat Financial Inclusion Limited AUM Growth (YoY) RoA RoE 46% 44% 5.86% 5.74% 29.26% 26.96% 38% 4.91% 34% 24.47% 3.80% 3.68% 19.18% 17.62% 17% Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q2FY18 Q3FY18 Q4FY18 Q1FY19

  26. Slide 26: Fact Sheet

    8. Fact Sheet

  27. Slide 27: Transaction Advisors

    Transaction Advisors IBL BFIL Financial Advisors Morgan Stanley, Arpwood Credit Suisse Business & Tax Diligence KPMG E&Y Tax Advisors E&Y - Legal Advisors Cyril Amarchand Mangaldas AZB & Partners Joint Valuation Report Deloitte Haskins & Sells S. R. Batliboi & Co Auditors’ Certificate Price Waterhou

  28. Slide 28: Transaction Summary

    Transaction Summary IBL BFIL Ticker: NSE: INDUSINDBK; BSE: 532187 NSE: BHARATFIN; BSE: 533228 Valuation: Transaction Terms 639 IBL Shares for Every 1,000 BFIL Shares Type of Consideration Stock – Fixed Exchange Ratio Premium at Announcement - 12.6% to 2 week VWAP Process: Announcement Date October 1

  29. Slide 29: Thank You

    Se e IndusInd Bank BHARAT Thank You

  30. Slide 30: Disclaimer

    Disclaimer The proposed transaction is subject to approval of various regulatory and other authorities, including without limitation, the Reserve Bank of India and the National Company Law Tribunal as well as the shareholders and creditors of BFIL and IndusInd Bank. Estimates, expectations, and busi

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