Lakshmi Vilas Bank gains 5% on report Clermont Group eyes stake purchase

Last month, the bank 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.
Shares of Lakshmi Vilas Bank surged 5 per cent to Rs 22.15 on the BSE on Friday after Business Standard reported that Singapore-based private equity player Clermont Group is in talks to pick up a sizeable stake in the bank. This round of capital infusion, if approved, could help LVB increase its capital adequacy from 3.45 per cent as on December 31, 2019, to over 7-8 per cent. 

At 11:17 am, the stock was trading 3 per cent higher at Rs 21.75 apiece on the BSE as against 95 points, or 0.26 per cent, rise in the S&P BSE Sensex at 35,938 level. A combined 23.43 million shares have changed hands on the counter on the NSE and BSE till the time of writing of this report.

With an investment of $150-200 million (Rs 1,100-1,500 crore), Clermont is eyeing a 15-20 per cent stake in LVB, the report said. “The capital infusion is likely to happen ahead of the merger with Clix and this should help the bank stay afloat till the merger is approved by the Reserve Bank of India (RBI) and concludes thereafter, a process that could take nine-12 months,” said a person working on the deal. READ HERE

Last month, the bank 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. 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. READ HERE

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.

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.



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