Lakshmi Vilas Bank Gets Board Approval To Raise Rs 500 Crore Via Rights Issue
Lakshmi Vilas Bank Mulund branch. (Source: BloombergQuint)

Lakshmi Vilas Bank Gets Board Approval To Raise Rs 500 Crore Via Rights Issue


Cash-strapped The Lakshmi Vilas Bank Ltd. on Thursday said its board has approved plans to raise up to Rs 500 crore through a rights issue.

The board at its meeting held on Oct.15, 2020, has considered and approved the raising of funds by issuance and allotment of equity shares or such other eligible securities for an aggregate amount of up to Rs 500 crore by way of a rights issue, LVB said in a regulatory filing.

Last week, the private sector lender had informed about receiving a non-binding offer from Aion-backed non-banking finance firm Clix Group for a merger.

Also read: Clix Group Submits A Non-Binding Offer For Lakshmi Vilas Bank

The old-generation Chennai-based private sector bank, which has been on the lookout for an investor and capital for long, had to face a blow in late September when its shareholders voted out seven directors of its board, including CEO S Sundar and promoters KR Pradeep and N Saiprasad.

Earlier in June this year, Clix Capital and LVB entered into a non-binding agreement for an amalgamation and informed about going ahead with the same on Sept. 5 in an all-share deal.

LVB, before this, tried to merge with SREI Capital and then with Indiabulls Housing Finance, but the RBI objected to the merger proposals on certain grounds.

In case the merger happens with Clix group, the net worth of the bank will more than double to Rs 3,100 crore from the current Rs 1,200 crore. Clix Capital has a net worth of Rs 1,900 crore that will become the net worth of the bank after the deal.

LVB's tier-1 capital ratio turned negative at 0.88% and 1.83% as of March 2020 and June 2020, respectively, compared to the minimum requirement of 8.875%.

Currently, LVB has a three-member team appointed by the RBI to run the bank under Meeta Makhan as chairperson, and Shakti Sinha and Satish Kumar Kalra as members.

Shares of LVB closed at Rs 17.55 apiece on BSE, down 4.10% from its previous close.

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