The private-equity player, through its non-banking financial arm Clix Capital, may lead the deal as it looks to buy over 51 per cent stake in the lender.
Capital-starved Lakshmi Vilas Bank
(LVB) on Monday said it had received a preliminary, nonbinding letter of intent (LoI) from AION Capital-backed Clix Capital
Services and Clix Finance
India for a proposed capital-raising transaction. The bank and the intending parties will be carrying out due diligence, LVB said in a statement to the stock exchanges, and will make “appropriate disclosures as required under the provisions of applicable law” in the event of the execution of definitive agreements.
Private equity player AION Capital, through the two non-banking financial units, is set to lead the deal as it looks to buy over a 51 per cent stake for Rs 1,400-1,600 crore, sources said. While LVB’s interim managing director and chief executive officer S Sundar declined to give details, sources confirmed it.
AION Capital is ready to take up to 74 per cent by roping in another investor. Besides, some existing investors may pump in equity into the bank to retain their stakes at current levels, taking the entire amount of capital infusion to around Rs 3,000 crore.
If the transaction fructifies, it would be the second deal in which an investor takes a majority stake in a private sector bank beyond the permissible limit of 26 per cent.
In 2018, Fairfax Financial Holdings had acquired a 51 per cent in CSB for around Rs 1,200 crore. This was also the first stake sale of an Indian bank to a foreign non-banking entity since the RBI tweaked ownership norms in May 2017.
LVB said its board has considered the Clix offer, dated June 12, for further processing on Monday. LVB’s statement also said the proposed transaction would be subject to regulatory and other customary approvals. Clix Capital
and Clix Finance
are said to begin due diligence on LVB next week and make a formal application to the RBI to approve the deal in four weeks.
In October 2019, the RBI had refused to give nod for the amalgamation of Indiabulls Housing Finance
and its subsidiary with LVB. Since then, the bank has been looking for new investors.
The LVB stock was locked in upper circuit on both exchanges and closed 5 per cent higher at Rs 15.30 on the BSE.