LVB to raise around Rs 2000-cr via pref share sale; appoints

The Tamil Nadu-based mid-sized private sector lender Lakshmi Vilas Bank (LVB) is planning to raise around Rs 2,000 crore in fresh equity capital before the end of the current financial year, and has appointed JP Morgan Chase for advice on the process, a top official said Sunday.

The bank has also set a target of Rs 800 crore to Rs 1,000 crore through recoveries from defaulters. So far this fiscal, it has recovered around Rs 350 crore from defaulters.

It had mopped up around Rs 700 crore last November through qualified institutional placement to promoters.

The fresh fund raising plan through preferential allotment comes on the back of an expected uptick in credit growth for the bank, led by small scale units and retail demand, chief executive and managing director Parthasarathi Mukherjee told PTI over phone from Chennai.

"We are working on raising anywhere between Rs 1,500 crore and Rs 2,000 crore in fresh equity capital during this fiscal year. While the effort is on to get the money in by December, in any case it should be in before the end of the fiscal year as JP Morgan Chase, which is advising us, is already getting a good response," Mukherjee said.

The money will help the bank fund its growth which can clip around 20 per cent, he said.

Asked about news reports that the bank's promoters are planning to exit or cede management control by selling up to 51 per cent to strategic investors, he declined to comment.

However, I-banking sources told PTI that the bank already has held many rounds of discussions with global private equity leaders like Baring and Aion Capital, among others.

They also said the deal may be modelled after the Canadian NRI Prem Watsa of Fairfax Holdings' purchase of 51 per cent in the Thrissur-based Catholic Syrian Bank (in Kerala) that was concluded recently.

On asset quality, Mukherjee said the bank has been "witnessing a perceptible improvement in our assets quality moderation in stress in the lending book and as well as buoyancy in recoveries."
In an exchange filing late Saturday on this, LVB said, "The bank has been consolidating its business significantly during the current financial year. During this year, asset quality slippages have considerably moderated and the bank has seen an impressive growth in low cost Casa balances. Overall, our funding has become a lot more granular in nature now."