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Buyout plan on IndusInd board menu

Mumbai, Nov. 25: IndusInd Bank today hinted at a churn in the banking industry when it told bourses that its board will meet on December 2 to “consider opportunities for business synergies/consolidation”. This is being seen as the pointer to an imminent buyout.

Though senior officials preferred not to comment on the options that will be on the table at next week’s huddle, it is understood that the bank may draw up plans to acquire a non-banking finance company (NBFC).

Industry analysts do not rule out the possibility of a merger with Ashok Leyland Finance & Leasing, a group company, with the bank.

Senior officials led by managing director Bhaskar Ghose have been emphasising that IndusInd Bank will opt for acquiring an NBFC unlike its counterparts who are more interested in buying out banks.

Officials said NBFCs with a good portfolio and a decent presence in the country would be preferred. The bank was even engaged in negotiations with two such NBFCs earlier this year.

Bank sources had earlier maintained that acquiring an NBFC should not be difficult due to the tough competition posed by banks to these companies. While many of the NBFCs have been unsuccessful in raising funds at competitive rates, banks have also been invading their turfs. Further, many NBFCs have also not been able to convert into banks.

IndusInd Bank has been growing inorganically through portfolio acquisition in retail assets. The bank had earlier acquired over Rs 750 crore of portfolio largely in commercial vehicle finance, tractor finance and housing loans.

The bourses seem to have anticipated the shape of things to come as the IndusInd scrip has gained in recent sessions. The scrip, which closed at Rs 25.80 on November 3, today closed at Rs 34.75, a gain of around 35 per cent.

Incidentally, the scrip scaled past its 52-week high of Rs 36 to touch a new high of Rs 36.20 in today's trading. Speculations have been rife on the stock markets that IndusInd Bank is either planning to take over an NBFC or Centurion Bank.

IndusInd Bank posted a net profit of Rs 76.23 crore in the second quarter, a 200 per cent increase over its net profit figure for the corresponding period in the previous year. The bank's consolidated net profit for the first six months of the year also shot up 135 per cent to Rs 100.87 crore against Rs 42.86 crore in the year-ago period.

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