Clix eyes 45% stake in Lakshmi Vilas Bank
- The Lakshmi Vilas Bank’s board has decided to consider for further processing the preliminary and non-binding offer from Clix Capital and Clix Finance in its meeting on Monday
- With Lakshmi Vilas Bank’s capital adequacy ratio shrinking to 3%, it has been in talks with institutional investors and funds to raise equity
Lakshmi Vilas Bank Ltd has received a non-binding offer from Pramod Bhasin-promoted Clix Capital Services Pvt. Ltd and Clix Finance India Pvt. Ltd to buy a 45% stake in the troubled private lender, two people familiar with the matter said. Clix will infuse nearly ₹2,300 crore into the bank, resulting in the amalgamation, they said.
The bank’s board has decided to consider for further processing the preliminary and non-binding offer from Clix Capital and Clix Finance in its meeting on Monday, the Chennai-based lender said in a regulatory filing. It said the proposed transaction is subject to due diligence and regulatory approvals.
With Lakshmi Vilas Bank’s capital adequacy ratio shrinking to 3%, it has been in talks with institutional investors and funds to raise equity. One of the investors, US-based fund house Tilden, even had a meeting with Reserve Bank of India (RBI) officials in February. The bank had also attempted a merger with Indiabulls Housing Finance, which was rejected by RBI. The merger was crucial for Lakshmi Vilas Bank, which needed to raise capital to lift curbs imposed on it by the central bank.
The private bank is currently under RBI’s prompt corrective action framework, which restricts new lending, due to a sharp rise in non-performing assets, insufficient liquidity and negative return on assets for two consecutive years.
According to norms set by the banking regulator, investors will have to seek RBI’s approval if any transaction leads to the purchase of more than a 5% stake in a bank. The new shareholders and directors will also have to meet the so-called ‘fit and proper’ criteria laid down by the regulator.
Shares of Lakshmi Vilas Bank surged 4.94% to ₹15.30 on BSE after the announcement, while the benchmark Sensex index fell 1.63% to 33,228.80.
Clix Cap, founded by Bhasin and Anil Chawla, is 85% owned by AION Capital Partners, a Mumbai-based private equity firm.
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First Published:16 Jun 2020, 12:46 AM IST
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