Shares of mid-size private sector Lakshmi Vilas Bank were locked in 5 per cent upper circuit on Tuesday at Rs 16 on the BSE on Tuesday, a day after the lender signed a preliminary proposal from the Aion Capital-backed non-banking lender Clix Capital for a merger. This deal will augment the Chennai-based lender’s capital base by around Rs 1,900 crore.
At 1.02 pm the Lakshmi Vilas Bank was up 4.97 per cent to Rs 16.06 on the BSE. Similarly on the NSE bank’s shares were at Rs 16.00, up by 4.92 per cent.
“Under the non-binding LoI, the proposed amalgamation is subject to completion of mutual due-diligence in exclusive window of 45 days, and will be subject to regulatory and other customary approvals,” the lender had said after the board meeting held on Monday.
Additionally, “In the event, the discussions between the contracting parties in relation to the proposed transaction are successful and definitive agreements are executed, we will make appropriate disclosures as required under the provisions of applicable law.”
Aeon Capital, which is promoted by ICICI Ventures and Apollo Global Management, owns 85 per cent stake in Clix Capital Services and Clix Finance India. These two companies were launched by former GE Capital honchos Pramod Bhasin and Anil Chawla.
In April 2019, the bank had entered into an exclusive agreement with the second-largest pure-play mortgage player Indiabulls Finance for an amalgamation but come October, the Reserve Bank threw out the proposal citing regulatory concerns over the suitor’s heavy exposure to realty.
After this, the bank started looking for new investors.
If the LVB-Clix Capital deal goes through, it will be the second instance of an investor taking a majority stake in a private bank beyond the current permissible limit of 26 per cent, after Canadian NRI investor Prem Watsa’s Fairfax Holdings acquired a 51 per cent stake in CSB (ex-Catholic Syrian Bank) for about Rs 1,200 crore in 2018.