Shares of Lakshmi Vilas Bank (LVB) surged 16% to Rs 20.60 on the BSE on Friday after the private sector lender received an indicative non-binding offer from the Clix Group.
The offer suggests the private equity firm comprising Clix Capital Services Private Limited, Clix Finance India Private Limited and Clix Housing Finance Private Limited would be amalgamated with LVB.
Clix Group offered to buy 74% stake as well as capital infusion of Rs 1,500–1,700 crore in Chennai-headquartered lender.
Clix, backed by AION Capital, had submitted its letter of intent to LVB on June 15. AION, a partnership between New York-based Apollo Global Management and ICICI Venture, saw the two entities parting ways on June 10. But, the funds continue.
According to the Banking Regulation Act, foreign entities can hold up to 74% stake in Indian banks.
Also, Clix has sought an exemption from the three-year lock-in period for sale of shares. Such an exemption was given to Fairfax, which acquired 51% stake in CSB Bank.
LVB recently amended its foreign holding clause to accommodate up to 74% holding.
The LVB board is set to meet on Friday to deliberate these terms.
It is also planning to roll out a rights issue of Rs 600–700 crore to infuse capital. At present, at a negative 1.83% tier-1 capital and 0.17% capital adequacy ratio (CAR), LVB lags the minimum CAR requirement of 8.875% by a huge margin.
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.