Fino Payments Bank mulling reverse merger with parent company post IPO

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After the Reserve Bank of India (RBI)’s approval for the reverse merger proposition for two small finance banks -- Equitas and Ujjivan’s -- Fino Payments Bank is considering merging its holding company into the bank.

Fino Payments Bank mulling reverse merger with parent company post IPO
After the Reserve Bank of India (RBI)’s approval for the reverse merger proposition for two small finance banks -- Equitas and Ujjivan’s -- Fino Payments Bank is considering merging its holding company into the bank.
The process would begin once Fino completes its proposed IPO by December, people aware of the matter told the Economic Times. Fino filed its DHRC with SEBI early this month. The small finance bank may also give partial exits to some of its early investors via the IPO.
Since Fino completes five years next year, there is no restriction for promoters now to hold on to 40 percent in the bank. Fino could also do away with the holding company structure. A merger of Fino Paytech with the payments bank could help shareholders realise value, one of the two persons familiar with the proposal said.
As per RBI, the rules state a non-operative financial holding company that promotes a bank should have a 40 percent stake for the first five years after they commence the bank’s business. It can be reduced to 15 percent over a period of 10 years.
With the payment bank expected to launch its IPO in the coming months, some of the investors in the bank may sell a part of their stake via the Rs1500 crore IPO. The current investors at Fino are Blackstone, Bharat Petroleum, Intel, IFC and ICICI Bank to name a few.
The bank made profits in the fourth quarter of the financial year 2020 and has remained profitable since then. Fino offers a range of financial products and services primarily in the digital space including current accounts and savings accounts, issuance of debit card and related transactions, facilitating domestic remittances, open banking functionality (via its Application Programming Interface (API), withdrawing and depositing cash (via micro-ATM or Aadhaar Enabled Payment System “AePS") and cash management services (CMS).