What triggered Equitas Small Finance Bank’s shares to hit 52-week high today

Equitas SFB on Tuesday informed that the bank has received an intimation from the RBI, according approval to M/s SBI Funds Management Limited (SBIFML) to acquire up to 9.99% of the paid-up equity capital of the Bank through the schemes of SBI Mutual Fund (SBIMF).

“The aforesaid approval by RBI is subject to compliance on prior approval for acquisition of shares or voting rights in Private Sector Banks and on Ownership in Private sector Banks and any other guidelines, regulations and statutes as applicable and is valid for a period of one year i.e. up to January 02, 2024,” it said in an exchange filing.

Equitas shares have gained over 53% during the last six months amid the reverse merger process and its managing director and chief executive deciding to continue with his position, months after announcing his intention to step down.

In November 2022, the company said that it has received the RBI’s nod for the acquisition of 9.99% stake by DSP Investment Managers Private Ltd in the firm, adding that the proposed acquisition of shares by DSPIM would be consequent to the Scheme of Amalgamation of Equitas Holdings Limited with the bank taking effect.

The board of Equitas SFB in March last year approved a new scheme of amalgamation between Equitas SFB and the promoter/holdco, Equitas Holdings Ltd (both listed entities), mainly to meet the promoter holding norms in ESFB. 

Notably, the holdco structure was voluntarily created to meet the RBI’s norms regarding promoter holdings in Equitas SFB. The RBI had also given promoters an option to exit after completing the five-year lock-in period post incorporation as the small finance bank. After the amalgamation, the holdco will cease to exist and ESFB will have a 100% public shareholding.

Based on the swap ratio (231:100), the shareholders of the holdco will get 231 shares of ESFB in exchange for 100 shares of the holdco, subject to regulatory and court approvals.