As time runs out for capital-starved Lakshmi Vilas Bank
(LVB) to infuse money, AION Capital-backed Clix Capital
is in talks to buy a majority stake in the private lender.
Highly-placed sources say the private-equity player through its non-banking financial arm Clix Capital
may lead the deal as it looks to buy over a 51 per cent stake and a formal letter of intent will be sent to LVB next week.
Clix Capital, a digital-lending NBFC focused on retail, consumer, small business, and equipment loans, has assets under management of roughly Rs 5,000 crore. AION Capital, along with former GE Capital India CEO Pramod Bhasin and former DE Shaw head Anil Chawla, acquired GE Capital’s commercial lending and leasing business in 2016 and renamed it Clix Capital.
US-based Apollo Global Management, the co-founder of AION Capital, announced on Wednesday that it was parting ways with joint-venture partner ICICI Venture. However, there would not be any impact on the $850-million India fund, which will be continued to be managed by the two until it is wound up.
While finer deal details are still in the works and would crystallise as and when regulatory comfort comes through, it is learnt that Clix Capital’s equity contribution to the deal will be Rs 1,200-1,500 crore. Some of the existing investors may also pump equity into the bank to retain their stakes at current levels, taking the entire amount of capital infusion to around Rs 3,000 crore.
Emails sent to Clix Capital remained unanswered till the time of going to press. “The bank from time to time considers capital raising and other options which are in its best interest. Upon the finalisation of such commitment where the bank is required to make disclosures as required under the provisions of applicable law, the required disclosures shall be made,” a spokesperson for LVB said.
In case the Reserve Bank of India allows new investors to take stake of over 70 per cent in LVB, AION Capital could rope in a partner to acquire the remaining stake in the bank. “If the regulator permits new investors to take stake up to 74 per cent in the bank, Clix Capital could rope in another investor to take the additional stake,” said a source. Singapore government-backed Temasek and Tilden Park Capital have also shown interest in acquiring stakes in the bank. LVB is expected to reveal the names of investors in the next two-three weeks, when it would publish its March 2020 quarter and FY20 results.
At 3.46 per cent capital adequacy and 23.27 per cent gross non-performing assets, LVB is one of the weakest privatesector lenders in India. In April last year, it had announced a merger with Indiabulls Housing Finance, though the deal did not get regulatory approval. This is the bank’s second attempt to infuse equity into its business.