Lakshmi Vilas Bank-Indiabulls Housing Finance merger plan shot down by RBI
The Reserve Bank of India (RBI) on Wednesday rejected the proposed merger between Lakshmi Vilas Bank and Indiabulls Housing Finance Ltd, scuppering the first ever attempt by a non-bank lender to merge with a bank in the country, Mint reported. “This is to inform that RBI vide their letter dated October 09, 2019, informed that the application for voluntary amalgamation of Indiabulls Housing Finance Ltd and Indiabulls Commercial Credit Ltd with The Lakshmi Vilas Bank Ltd cannot be approved," Lakshmi Vilas Bank said Wednesday in a stock exchange filing. Uncertainty around the banking regulator’s approval has been an overhang on the two stocks, with shares of Indiabulls Housing losing 73.45% and Lakshmi Vilas Bank losing 71% since the all-stock merger was announced in April. Last month, RBI placed Lakshmi Vilas Bank under prompt corrective action (PCA) owing to the high level of bad loans, insufficient capital adequacy ratio, negative return on assets (RoA) for two consecutive years and high leverage. For the year ended 31 March, the bank’s net non-performing assets stood at 7.49%, capital adequacy ratio at 7.72% and RoA at -2.32%. Lakshmi Vilas Bank will now have to independently explore options for raising capital to help lift the restrictions placed on it.
Altico Capital looks to raise ₹2,000 crore
Altico Capital India Ltd, the real estate-focused lender that defaulted on interest payments in September, has proposed to sell loans worth around ₹2,000 crore as part of its debt resolution plan, Mint reported citing two people directly aware of the development. The resolution plan is expected to be submitted to Altico’s lenders and investors by the end of next week. The Mumbai-based real estate lender has already identified the assets that it plans to sell as part of its resolution plan and it will offer the proceeds from such a sale, upfront to its lenders, said the first person mentioned above. Altico currently has a collateral cover of close to ₹11,000 crore against its present loan book size of around ₹7,000 crore. Located across seven cities, including Mumbai, Chennai and Bengaluru, these assets are land parcels, commercial and residential projects at different stages of constructions. The company’s portfolio of real estate investment spread across 30% commercial office, 60% residential and the remaining in logistics and warehousing. At present, Altico’s total outstanding debt stands at ₹4,361.5 crore, from 27 lenders including Yes Bank, State Bank of India and HDFC Bank, among others.
Edelweiss eyes first close of $1 billion credit fund by year end
Financial services focused Edelweiss Group is eyeing the first close of its latest alternative investment fund, Edelweiss Special Opportunities Fund (ESOF) III, at $600-700 million by December-January, Mint reported citing Venkat Ramaswamy, executive director of Edelweiss Financial Services Ltd and co-head at Edelweiss Global Investment Advisors. ESOF III is a credit fund that focuses on investing in the performing credit space and will lend to companies that need funds for growth. It will not invest in areas such as real estate and distressed credit opportunities. The third fund’s corpus will be nearly three times the size of the previous fund, ESOF II, which closed at $340 million in April 2017. Its first credit fund ESOF I garnered $230 million. The financial services group hopes to raise the capital from 10-12 large foreign institutional investors, including some of the largest global, predominantly North American and European insurance companies and pension funds. The firm expects to close the third fund in the next six months, which will take its assets under management in the alternative investments business from $3.5 billion to $4.5 billion. ESOF III will invest in Indian holding or operating firms that are seeking growth, but will not fund real estate and distressed opportunities.
Lightbox leads investment in online jeweller Melorra
Online jewellery brand Melorra has raised $12 million in a Series C round led by existing investor, venture capital firm Lightbox Ventures, Mint reported citing founder and chief executive officer Saroja Yeramilli. Other investors include the Burman family office, the private investment arm of the promoters of Dabur India, and the Jeejeebhoy family office. Melorra also raised $2 million in debt from BlackSoil Capital, which provides debt to startups and other firms. The company sells necklaces, bracelets, rings, and other jewellery items on its website and claims to deliver to 1,300 towns across the country. It caters to the affordable and daily wear jewellery segment, with an average transaction value of ₹20,000. Melorra achieved gross revenue of about ₹55 crore last fiscal, which it expects to jump to ₹150 crore this fiscal through March, and ₹400 crore next year. The jewellery startup segment, online and offline, has seen rising investor interest, driven by young users seeking affordable, better designed, and innovative products with rapidly changing trends. CaratLane, which counted Tiger Global Management among its investors, was acquired by Tata Group’s Titan Co. Ltd in 2016. Titan invested a further ₹100 crore in the venture this April to increase its stake. Jewellery retailer BlueStone, backed by firms such as Accel, Saama Capital, and IvyCap Ventures, aims to raise $25 million to expand its offline presence, Mint reported on 12 February.
Airtel Raises $750 m via bond issue to lower its debt burden
Bharti Airtel has raised $750 million ( ₹5,325 crore) through subordinated perpetual security bonds issued by its wholly-owned subsidiary Network i2i Ltd, proceeds from which will be used for reducing debt and strengthening the carrier’s balance sheet to invest in expanding its 4G network, The Economic Times reported. Fund asset managers, insurance companies, pension funds and banks across Europe, Asia and the US have picked up the bonds, which have been priced on a par with coupon and yield of 5.650%. The proceeds shall be used for deleveraging through refinancing, investments in subsidiaries and general corporate purpose. The perpetual bonds are a quasi-equity obligation without a fixed maturity, which will have a five-and-a-half years non-call period, which means that debt cannot be repaid before this period. The bonds are guaranteed by Bharti Airtel, the company added. They have been rated as BB by Fitch. Barclays Bank, BNP Paribas, Citigroup Global Markets, Hongkong and Shanghai Banking Corp, JP Morgan Securities, Merrill Lynch (Singapore) and Standard Chartered Bank were joint bookrunners for this fund raise. This is the ninth time that India’s No. 2 carrier by subscribers has raised money through bonds since 2013, of which all but one tapped international investors. Two of these nine bonds issued matured in 2018. The other six bonds issued earlier, which collectively raised about ₹43,888 crore, are due in the coming years. Airtel reported a debt of ₹1.16 lakh crore at the end of June. The company is trying to strengthen its balance sheet by halving debt by the end of this fiscal year, while retaining only its liabilities to the government for spectrum purchased at auction. This will allow it to compete aggressively for subscribers with Reliance Jio and Vodafone Idea.
Inventus Cap Closes Third Fund at ₹369 crore
Inventus Capital Partners has made the final close of its third fund — Inventus-III — at ₹369 crore, the latest in a line of early-stage, technology-focused funds that have raised fresh capital this year, The Economic Times reported. Inventus-III is the Silicon Valley and Bengaluru-based venture capital firm’s first India-dedicated fund, and is led by its local team, which comprises general partners Samir Kumar, Parag Dhol and Rutvik Doshi. The latest investment vehicle — which had an initial target corpus of ₹325 crore and which primarily looks to make Series-A bets — has been backed by a mix of institutional investors, such as Small Industries Development Bank of India, family offices and technology entrepreneurs, including founders from its portfolio companies such as Phanindra Sama of red-Bus and Ramesh Emani of Insta Health. Prior to setting up Inventus-III, Inventus Capital Partners had primarily invested through its two US-based funds, which cumulatively had about $158 million under management. Inventus-III made its first close of ₹200 crore in July last year. The new fund, which typically invests ₹5-15 crore, has made five investments so far, including in SaaS startup Worxogo, smart helmet accessory maker BluArmor, local experiences and product discovery platform LBB, blockchain-based supply chain app Koinearth and children’s educational toy venture PlayShifu. The fund-III will look to make about 15 investments in total.