Aditya Birla Capital, Aditya Birla Finance announce amalgamation scheme

12 Mar 2024 , 11:16 AM

On Monday, the Boards of Aditya Birla Capital Limited (ABCL) and Aditya Birla Finance (ABFL) accepted the Scheme of Amalgamation (Scheme) of the two firms, which would further establish a huge unified operational NBFC.

It should be emphasized that ABCL is a listed systemically significant non-deposit-taking core investment company (NBFC-CIC), whereas ABFL is a non-deposit-taking systematically important NBFC (NBFC-ICC).

The company’s planned amalgamation, which is subject to regulatory and other clearances as necessary, has several advantages, including the elimination of legal entities and the streamlining of Aditya Birla Capital’s group structure.

“The suggested amalgamation aims to ensure adherence to the Scale-based Regulations of RBI, mandating the compulsory listing of Aditya Birla Finance by September 30, 2025,” the company stated.

Following the merger, Vishakha Mulye, the current CEO of ABCL, is set to assume the position of Managing Director and CEO, while Rakesh Singh will take on the role of Executive Director and CEO (NBFC) in the consolidated company, pending necessary regulatory and statutory approvals.

Aditya Birla Capital will be transformed from a holding company to an operational NBFC following the merger.

In a press release, the company stated that the merger would establish a cohesive and sizable entity, endowed with enhanced financial strength and flexibility, providing direct access to capital. This strategic move is expected to empower the company to optimize the utilization and allocation of capital, thereby maximizing its potential to capitalize on opportunities.

The proposed amalgamation also provides an opportunity for corporate consolidation and operational synergies, which will result in expansion and long-term sustainable growth.

Kumar Mangalam Birla, the Chairman of the Aditya Birla Group, expressed that the merger would establish a robust capital foundation for Aditya Birla Capital. He also commended the financial services sector for its significant contribution to India’s economic growth.

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