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Ujjivan Financial Services plans reverse merger after IPO, looks to hire more staff

UjjivanFinancial Services Pvt. Ltd. plans to undergo a reverse mergerafter it launches its IPO to meet regulatory requirements for its planned smallfinance bank, Business Standard reportedApril 26.

Under the reverse merger scheme, the listed UjjivanFinancial will acquire its new banking subsidiary, eliminating the need for thebank to separately list at a later date. Regulatory norms require that a smallfinance bank be listed within three years, once its net worth reaches 5 billionrupees.

Ujjivan Financial will formally propose the plan with theReserve Bank of India at a later date, said, Samit Ghosh, the company'smanaging director. The firm is preparing to launch an IPO on April 28 to meet capital requirementsfor its new banking operations.

Ghosh added that the company will pare down foreignownerships to between 44% and 45%, lower than the 49% ceiling required for itto transform into a bank.

As part of the plan, foreign shareholders Mauritius UnitusCorp., WCP Holdings III and Women's World Banking Capital Partners will offloadtheir shares in the company, The EconomicTimes reported April 26. Other shareholders are also expected to some of their shares.

The company also plans to hire more than 2,000 employees toreach its target of 10,000 staff when its small finance bank starts operations,The Economic Times separatelyreported the same day. It has 7,800 employees.

In addition, Ghosh said the bank plans to add 260 branches inphases within three months of its new operations.

Ujjivan Financial was one of the 10 companies grantedin-principle approvalby the central bank to operate a small finance bank.The company plans to formally launch the new bank by April 2017.

As of April 26, US$1was equivalent to 66.48 Indian rupees.