Lakshmi Vilas Bank gains 16% on receiving non-binding offer from Clix Group

Shares of Lakshmi Vilas Bank (LVB) surged 16 per cent to Rs 20.60 on the BSE on Friday after the private sector lender said that it had received an indicative non-binding offer from the Clix Group.

The offer suggests the private equity firm comprising Clix Capital Services Private Limited, Clix Finance India Private Limited and Clix Housing Finance Private Limited would be amalgamated with LVB.

“Further to the process of considering and evaluating the proposed amalgamation with Clix Capital Services Private Limited ("Clix Capital"),  Clix Finance India Private Limited ("Clix Finance") and Clix Housing Finance Private Limited ("Clix Housing") (collectively, the "Clix Group"), we are glad to inform that, the Bank has received an indicative non-binding offer from Clix Group,” LVB said in exchange filing.

The Bank will continue to share information on material developments as and when they materialize, it said.

The bank had received investor interest from the Clix group, comprising Clix Capital Services Private Limited, Clix Finance India Private Limited and Clix Housing Finance Private Limited, in June 2020, and the mutual due diligence was completed as of 15 September 2020.

LVB's stock had tanked 36 per cent from its recent high of Rs 24.55, touched on September 17 to Rs 15.66 on the BSE in intra-day trade on Thursday.

On Wednesday, October 7, Brickwork Ratings (BWR) downgraded the rating of the bank's long-term bonds of Rs 50.50 crore. The rating downgrade necessarily factors in the rejection of seven directors of the bank, including the interim managing director and chief executive officer of the bank, by the bank’s shareholders; the bank’s substantially weak capital position; very high levels of gross non-performing assets (NPAs) and continuous losses reported by the bank for the past 10 quarters, except Q4FY20, the rating agency said in rationale.

The proposed amalgamation is expected to address the concerns on the bank’s capital, reduce net NPAs and initiate efforts to exit the PCA required for its business growth. BWR shall also continue to monitor the bank for any restrictions by the regulator on the servicing of the coupon or debt obligations on any of its existing bond issues, and this shall remain a key rating monitorable. The bank has met its coupon servicing due on BWR-rated bonds due on 30 September 2020, and the debenture trustee has confirmed its payment, it said.

At 09:26 am, LVB was trading 13 per cent higher at Rs 20.20 on the BSE, as compared to 0.28 per cent rise in the S&P BSE Sensex. The trading volumes on the counter nearly doubled with a combined 2.24 million equity shares changing hands on the NSE and BSE, so far.