Lakshmi Vilas Bank raises Rs 168 crore via QIP

Private sector lender Lakshmi Vilas Bank has raised Rs 168 crore via qualified institutional placement to increase its capital base. However, the bank has an approval from its board to raise up to Rs 600 crore and so it is likely to raise more capital in the coming months. Apart from shoring up its capital adequacy ratio, the bank which was at only 10.10% at the end of quarter ended September is also looking at raising capital to augment its growth plans.

Centrum Capital was the sole lead manager to the issue. Commenting on the deal, Gaurav Bhandari, MD, Centrum Broking, said “The fund raise will augment the capital base for the next level of growth for the bank.”

The management is aiming for 20-25% growth for the next 10 years and aims to scale up the business nine times higher from the present level. This will be led by strategy shift towards high yielding retail and SME loans, composition for which is set to rise up to 75% from 58 percent currently. The bank is also increasing the share of low-cost CASA deposits up to 25% by 2020 and to over 35% by 2026. At the end of the quarter ended September, the bank's Casa stood at 17.31%. 

The bank is also looking at improving its branch network, which is set to cross the 500  mark by the end of this financial year and is expected to touch 750 by 2020. The lender is also looking at bringing down its cost to income ratio to improve its profitability. It is aiming to reduce the cost-income ratio to 45% by 2019-20 from 56% at the end of last financial year.

In this new avatar, the bank is also looking at revamping its backend operations and technology framework. Apart from this, the lender has also created specific businesses to look at specific verticals.