What is the controversy over the merger of Equitas and Equitas Small Finance Bank?

Analysts have questioned the share-swap ratio in the merger deal between Equitas Small Finance Bank and Equitas Holdings. The perception is that the swap ratio benefits shareholders of Equitas Holdings despite having a smaller asset base and a lower market cap. However, it is normal for holding companies to trade at a discount. As per the deal, shareholders of Equitas Holdings will get 231 shares of Equitas SFB for every 100 shares of Equitas Holdings.

However, the swap ratio is based on the valuation report submitted by a registered valuer. In addition, JM Financial has provided fairness opinion and V Sankar Aiyar & Co. has certified that the accounting treatment in the scheme conformed to the applicable accounting standards. Equitas SFB is engaged in retail banking with accent on microfinance, CV finance, home finance, loan-against-property, MSME finance and corporate finance.