Capital-starved private lender Lakshmi Vilas Bank (LVB) is making another attempt to find a suitor. This time, it is AION-backed lender Clix Capital Services and Clix Finance India, who have placed a non-binding bid to amalgamate the operations of the two lenders, in the process valuing the bank north of Rs 3,000 crore. The plan needs the RBI’s approval.
LVB is under RBI monitoring after its bad loans ballooned and capital adequacy requirements fell way short of statutory requirements. It had proposed a merger with Indiabulls, which was struck down by the RBI. Since then, it has been limping, trying to find a partner, and Clix has made a non-binding letter of intent (LoI) to pick up a significant stake in the bank.
The market capitalisation of the bank was Rs 515 crore at Monday’s stock price of Rs 15.3 apiece on the bourses. The stock was locked in the upper circuit. The board of directors of LVB met on Monday and gave its go ahead for the offer from Clix.
“Under the non-binding LoI, the proposed amalgamation is subject to completion of mutual due-diligence in an exclusive window of 45 days, and will be subject to regulatory and other customary approvals. In the event the discussions between the contracting parties in relation to the proposed transaction is successful and definitive agreements are executed, we will make appropriate disclosures as required under the provisions of applicable law,” a bank statement said.
LVB MD and CEO S Sundar told TOI, “The directors have given their approval to process the offer received from the non-banking finance company for stake purchase in the bank on June 12. The next step will be to seek the required regulatory approval.”
He was tight lipped about the contours of the offer. Any transaction involving a stake buy of more than 5% needs RBI approval and the maximum stake an entity can buy in a bank is 49%.
Source: Economic Times