4 NBFCs plan merger to create Rs 2,500 cr behemoth

4 NBFCs plan merger to create Rs 2,500 cr behemoth
ENS ECONOMIC BUREAU

MUMBAI, JULY 31: In a major consolidation move in the financial services sector, four leading leasing and hire purchase companies -- Alpic Finance Ltd, Apple Finance Ltd, Apple Credit Corporation Ltd and Srei International Finance -- have announced their plan to merge within the next six months to form a Rs 2,500 crore company specialising in financing of automobiles and equipment.

The respective boards of the four companies, which met on Monday, cleared the proposal for merging themselves into a distinct entity "to synergise each other strengths in their respective areas of operations." According to analysts, one reason for the merger could be high level of non-performing assets.

``The boards decided to form respective committees for the four companies tofinalise the appointment of financial advisors to undertake due diligence andwork out the valuation. On the basis of the due diligence, the stock-swap ratio will be worked out," said an official of a company.

"The process of arriving the stock swap ratio will be completed in a month'stime. Then, the four companies have to move an application to high courts falling within their respective jurisdiction for convening the shareholdersand creditors meetings for receiving their approvals," he added.

Apple Finance and Alpic Finance fall under the jurisdiction of the Bombay High Court, while Apple Credit under Chennai High Court and Srei under Calcutta high court. Both Apple Finance and Apple Credit are active in automobile and truck financing. Alpic is focussed on car and medical equipment leasing and Srei in construction equipment leasing. The four companies have an aggregate depositor base of over a million.

According to latest financial figures, the total net worth of the four companies is around Rs 750 crore. The net worth of Apple Finance is Rs 310 crore, Alpic Finance Rs 180 crore, Srei Rs 150 crore and Apple Credit Rs 108 crore.

The combined paid-up equity capital is Rs 135 crore, the break-up being Apple Finance (Rs 55 crore), Alpic Finance (Rs 12 crore), Srei (Rs 53 crore)and Apple Credit (Rs 15 crore). The secured loans of the four companies is Rs 1,300 crore, while unsecured loans are Rs 206 crore.

Gross assets of all the four companies total Rs 2,550 crore, of which Rs 1,830 crore are lease and hire purchase assets. Apple Finance has a branch network of 40, Alpic (94), Srei (22) and Apple Credit (12).

``The strategy of forging of forces would help the combined entity to look beyond the conventional boundaries of geography, size of products, towards global opportunities for faster growth, attainment of economies of scale, sourcing of international finance and improved market share and product mix, says a release issued jointly by the four NBFCs,'' said a release.