Aditya Birla Capital, Aditya Birla Finance announce a Scheme of Amalgamation for creation of a large NBFC

Aditya Birla Capital’s decision to merge with its wholly-owned subsidiary, Aditya Birla Finance, is poised to reshape the NBFC landscape in India. This strategic move not only consolidates their financial services arm but also aligns with RBI’s regulations, avoiding the need for Aditya Birla Finance to go public.

Development:

• The board of Aditya Birla Capital approved the merger on March 11, subject to regulatory approvals.
• Upon completion, Aditya Birla Capital will transition from a holding company to an NBFC, enhancing financial strength and flexibility.
• Key leadership roles post-merger: Vishakha Mulye as MD & CEO, and Rakesh Singh as Executive Director and CEO (NBFC).

Regulatory Compliance:

• The merger aligns with RBI’s scale-based regulations, sparing Aditya Birla Finance from mandatory listing by September 30, 2025.
• Aditya Birla Finance, classified in the upper layer of RBI’s list, faces enhanced regulatory requirements for five years.

3. Business Growth and Numbers:

• Combined AUM of the merged entity expected to exceed Rs. 5 lakh crore.
• Aditya Birla Capital’s aggregate AUM as of December 31, 2023, stood at over Rs. 4.10 lakh crore, with Aditya Birla Finance contributing Rs. 98,600 crore.
• Diverse business portfolio ranging from lending to wealth management solutions.

Industry Impact:

• While the merger creates a significant market opportunity for the combined entity, experts foresee minimal impact on other players in the NBFC sector.
• Saurabh Bhalerao from CareEdge emphasizes that existing players have established their businesses and will continue operations unaffected by the merger.