Shares of Axis Bank gained nearly 2 per cent in morning trade on Thursday, after the company said it will acquire US-based Citi’s consumer business in India for Rs 12,325 crore.The stock jumped 1.82 per cent to Rs 763.90 on the BSE.
At the NSE, it gained 1.67 per cent to Rs 763. Axis Bank on Wednesday said it will acquire US-based Citi’s consumer business in India for Rs 12,325 crore in one of the largest deals in the Indian financial services space, which will help it close the gap with larger peers like ICICI Bank and HDFC Bank.
The two lenders signed a definitive agreement for the sale, which will involve the third largest private lender taking over Citi’s credit cards, personal loans and wealth management businesses that are focused on the affluent segment.
Regulatory approvals are expected in nine months, after which the payment will be made and a complex integration process will begin. “Axis Bank has grown organically all these years and has scaled well. But our aspirations are bigger. This deal gives us that strategic thrust to close the gap between us and some of our peers,” its chief executive and managing director Amitabh Chaudhry told reporters.
Apart from a consideration of Rs 12,325 crore or USD 1.6 billion, which will be paid using the balance sheet strength, the deal also involves an equity requirement of Rs 3,450 crore for the loan book of over Rs 27,400 crore which will get transferred and also a payout of up to Rs 1,500 crore in integration cost, which will be paid by Axis to Citi for servicing the business till the merger gets complete.