Lakshmi Vilas Bank hits 5% upper circuit in subdued market; here's why

Shares of Lakshmi Vilas Bank (LVB) were locked in the upper circuit of 5 per cent at Rs 73.80 per share on Friday in an otherwise subdued market after Indiabulls Group attributed the stake sale in its realty arm, Indiabulls Real Estate (IBREL), to fastrack the merger of the bank with Indiabulls Housing Finance.

In an interview with CNBC TV18, Ajit Mittal, group president, Indiabulls Group said that promoters of IBREL disposed off 14 per cent stake in the company via block deal to "fast-track the merger process", which is expected to be completed over the next nine to 12 months.

“In line with company’s promoters' strategy to focus on financial services in the long run, the promoters intend to dispose-off up to 14 per cent of the fully paid-up share capital of the company to third party investors,” it said in a regulatory filing. Till yesterday, promoters held 38.72 per cent stake in the real estate company.

While it was earlier reported that the US-based private equity giant Blackstone Group and Bengaluru-based property developer Embassy Group would jointly acquire Indiabulls Real Estate's promoters' stake at an estimated enterprise value of around USD 1 billion, reports now suggest that Blackstone would not be directly involved in the deal.

On April 12, 2019, the bank's board had approved the merger of Indiabulls Housing Finance and its wholly owned subsidiary, Indiabulls Commercial Credit with Lakshmi Vilas Bank. The scheme is subject to the receipt of approval from the Reserve Bank of India, other regulatory approvals and other applicable compliances thereafter.

As per the share swap ratio for the merger, for every 100 shares of LVB shareholders will get 14 shares of Indiabulls Housing Finance.

Till 11:32 am, a combined 1.25 million shares changed hands on Lakshmi Vilas Bank counter. There were pending 'buy' orders for 6,87,783 shares on the NSE and BSE, data showed.

The stock of Indiabulls Housing Finance was trading 2 per cent higher at Rs 752 apiece, after gaining 4 per cent in intra-day trade. In comparison, the S&P BSE Sensex was down 0.15 per cent at 39,471 points.