MUMBAI, Oct 30 (Reuters) – India’s AU Small Finance Bank (AUFI.NS) is buying IPO-bound peer Fincare Small Finance Bank in an all-stock deal worth 44.11 billion rupees ($529.80 million), as it seeks to expand its presence in southern India and enter the microfinance space.
Shares of AU Small Finance Bank dropped nearly 9% to their lowest since mid-April on Monday on concerns that the deal, announced late on Sunday, would lead to heightened focus on unsecured lending at the bank.
The bank’s asset quality deteriorated and provisions for bad loans spiked in the second quarter, according to results released on Saturday.
The main strategic pivot for AU Small Finance Bank in the deal is an increased focus on unsecured lending, said Shailesh Kanani, an analyst at Centrum Broking.
This shift could potentially expose the bank to macroeconomic challenges, which it has so far managed to weather more…
