Street signs: Lakshmi Vilas Bank-Indiabulls merger, Polycab stock, and more

Street got whiff of merger? 
 

The Street seems to have got a hint of the merger proposal between Lakshmi Vilas Bank (LVB) and Indiabulls Housing Finance. Shares of the private sector lender rallied over 30 per cent last week. On Friday, after market hours, the two companies announced the terms of the deal and a swap ratio of 14 shares of Indiabulls Housing Finance for 100 shares of LVB. Shares of LVB last closed at Rs 93, while those of Indiabulls Housing Finance ended at Rs 907. Despite the sharp rally, LVB shareholders are getting a premium of 36 per cent. “There was a buzz about the deal in the market. Some traders built up aggressive positions in LVB on speculation that it will get a huge premium,” said a broker. 

 

Samie Modak

Telecom fund raise splits bankers 
 

With the rights issues of Bharti Airtel and Vodafone Idea coinciding, the investment banking community has been spilt in two. To avoid conflict of interest, the two telecom giants have appointed unique set of bankers to handle their mega fund raise. Axis Capital, JP Morgan, Goldman Sachs, HSBC, and ICICI Securities are handling Bharti Airtel’s Rs 25,000-crore rights issue. Bank of America Merrill Lynch, Kotak Mahindra Bank and Morgan Stanley are handling Vodafone Idea’s Rs 25,000-crore rights issue. The
issue of conflict of interest is sensitive for investment banking when it comes to dealing with companies that are direct competitors.
 

Samie Modak

Grey market premium for Polycab
 

Shares of Polycab India, one of India’s leading manufacturer of wires and cables, are changing hands at a premium of 15-20 per cent in the grey market. The premium is among the highest for recent IPOs. The IPO is already off to a good start as it garnered 70 per cent subscription on the first day itself. In additional, it saw a huge demand from anchor investors, whom it allotted shares worth Rs 400 crore. The total issue size of Polycab IPO is Rs 1,200 crore, of which Rs 400 crore is fresh fund raise and the remaining is secondary share sale. Post the IPO, the company will be valued at Rs 8,000 crore at the issue price.

Sundar Sethuraman