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Lakshmi Vilas Bank gets board's nod to raise Rs 500 crore via rights issue

Cash-strapped Lakshmi Vilas Bank on Thursday said its board has approved plans to raise up to Rs 500 crore through a rights issue

Lakshmi Vilas Bank | Lakshmi Vilas Bank rights issue

Press Trust of India  |  New Delhi 

Lakshmi Vilas Bank

Cash-strapped on Thursday said its board has approved plans to raise up to Rs 500 crore through a rights issue.

The board at its meeting held on October 15, 2020, has considered and approved the raising of funds by issuance and allotment of equity shares or such other eligible securities for an aggregate amount of up to Rs 500 crore by way of a rights issue, LVB said in a regulatory filing.

Last week, the private sector lender had informed about receiving a non-binding offer from Aion-backed non-banking firm Clix Group for a merger.

The old-generation Chennai-based private sector bank, which has been on the lookout for an investor and capital for long, had to face a blow in late September when its shareholders voted out seven directors of its board, including CEO S Sundar and promoters K R Pradeep and N Saiprasad.

Earlier in June this year, Clix Capital and LVB entered into a non-binding agreement for an amalgamation and informed about going ahead with the same on September 15 in an all-share deal.

LVB, before this, tried to merge with Srei Capital and then with Indiabulls Housing Finance, but the RBI objected to the merger proposals on certain grounds.

In case the merger happens with Clix group, the net worth of the bank will more than double to Rs 3,100 crore from the current Rs 1,200 crore. Clix Capital has a net worth of Rs 1,900 crore that will become the net worth of the bank after the deal.

LVB's tier-1 capital ratio turned negative at 0.88 per cent and 1.83 per cent as of March 2020 and June 2020, respectively, compared to the minimum requirement of 8.875 per cent.

Currently, LVB has a three-member team appointed by the RBI to run the bank under Meeta Makhan as chairperson, and Shakti Sinha and Satish Kumar Kalra as members.

Shares of LVB closed at Rs 17.55 apiece on BSE, down 4.10 per cent from its previous close.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Thu, October 15 2020. 16:56 IST