Aditya Birla Merges Firms to Form NBFC Giant

Aditya Birla Capital Limited (ABCL) and Aditya Birla Finance (ABFL) have announced a scheme of amalgamation to create a large unified operating non-banking financial company (NBFC). The merger will result in reduction of legal entities and simplification of the group structure of Aditya Birla Capital. It will also comply with the scale-based regulations of the Reserve Bank of India (RBI), which require mandatory listing of Aditya Birla Finance by September 30, 2025.

Benefits of the merger

The proposed merger will have several benefits for the stakeholders of both the companies. According to a press release by ABCL, the merger will:

  • Create a strong capital base for ABCL to grow its business and participate in India’s growth story.
  • Enable direct access to capital and efficient utilisation and allocation of capital across businesses.
  • Consolidate the businesses and operational synergies and result in expansion and long-term sustainable growth.
  • Enhance value for various stakeholders of the company.

Details of the merger

ABCL is a listed systemically important non-deposit taking core investment company (NBFC-CIC), while ABFL is a non-deposit taking systemically important NBFC (NBFC-ICC). ABFL is a wholly owned subsidiary of ABCL. The boards of both the companies have approved the scheme of amalgamation, which is subject to regulatory and other approvals as required.

Post the merger, ABCL will get converted from a holding company to an operating NBFC. Vishakha Mulye, currently the CEO of ABCL, will take the role of MD & CEO and Rakesh Singh will serve as Executive Director and CEO (NBFC) of the amalgamated company, subject to regulatory/statutory approvals as may be required.

As of end of December 2023 quarter, ABCL manages aggregate assets under management of about Rs. 4.1 lakh crore with a total lending AUM of Rs 1,15,139 crore. It reported consolidated revenue of Rs 26,791 crore and a profit after tax of Rs 2,090 crore for 9M FY 2024. ABFL, on the other hand, has total assets worth Rs 13,495.47 crore and a net worth of Rs 13,306.87 crore, as of December 31, 2023.

Views of the group chairman

Kumar Mangalam Birla, Chairman Aditya Birla Group, said that the merger will enable creation of a strong capital base for Aditya Birla Capital, while lauding the contribution of financial services sector in India’s growth.

“The proposed amalgamation will create a strong capital base for Aditya Birla Capital to grow its business and participate in India’s growth story, successfully fulfilling its commitment to empower the financial aspirations of millions of Indians,” he said.

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