Indiabulls Financial Services Ltd (IBFSL) will reverse-merge with its wholly-owned subsidiary, Indiabulls Housing Finance Ltd (IHFL). The IBFSL board took the decision on reverse merger on Friday, said a company statement.

Once the scheme of amalgamation becomes effective, on sanction by the High Court of Delhi and other regulatory and stakeholder approvals, shareholders of IBFSL holding 1 equity share of Rs 2 each will get 1 equity share of Rs 2 each of IHFL, said the statement.

“The majority of the existing and incremental business of IBFSL relates to housing finance…..Amalgamation with IHFL will consolidate the capital available to the merged entity, enabling it to steadily grow its mortgage loans business,” said Mr Gagan Banga, CEO, IBFSL.

IHFL's mortgage portfolio has grown by around 37 per cent from about Rs 20,500 crore as on March-end 2011 to about Rs 28,000 crore as on March-end 2012, said Mr Banga.

“There is good demand for home loans in the sub-Rs 25 lakh segment. We expect to disburse Rs 2,000 crore every quarter in the next four quarters. We have cut the interest rate on home loans (floating rate) to 10.50 per cent from 10.75 per cent,” said the IHFL chief.

The IBFSL board also approved allotment of up to 2.07 crore warrants convertible into 2.07 equity shares each at a conversion price of Rs 218 per warrant to the three promoters, the CEO and Deputy Managing Director.

The aggregate funds receivable by the company, pursuant to the conversion of warrants, would be Rs 451.26 crore.

Meanwhile, IBFSL has reported a 24 per cent increase in net profit at Rs 303 crore in the January-March 2012 period, against Rs 244 crore in the corresponding period last year.

In the financial year ended March 31, 2012 the company reported a 33 per cent increase in net profit at Rs 1,006 crore, against Rs 759 crore in FY2011.

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