BANK NEWS
Lakshmi Vilas Bank looks to raise Rs 1000 cr in talks with investors for capital infusion
New Delhi: Less than a month after striking a deal with Clix Capital for fund infusion, Lakshmi Vilas Bank (LVB) chief S Sundar has said the lender is in talks with other investors to mop up Rs 1,000 crore additional capital. The nearly 100-year-old LVB is looking at ways to bolster its capital adequacy ratio and the merger deal with Aion Capital-backed non-banking financial company Clix Capital would bring in Rs 1,900 crore for the bank.
The bank needs capital to grow and make profit, and we have got Clix as they have expressed their interest to merge with the bank. The advantage is that they are capital surplus and we are capital deficit, LVB, MD and CEO S Sundar told PTI in an interview.
“We need capital, they have surplus capital. So, I find it is a very good alignment in the sense that they have about Rs 1,900 crore of capital (surplus),” he said. While noting that the merger with Clix would give enough strength to do business, Sundar said the bank was in need of additional funds.
Explaining the deal with the Gurgaon-based investor, Sundar said Clix is bringing about Rs 4,500-4,600 crore as assets, of which Rs 1,900 crore is shareholders’ fund. “I find this is a very good alignment in the sense that they have about Rs 1,900 crore of capital and their assets are about Rs 4,500 crore-Rs 4,600 crore or so. They may need capital allocation of 10 per cent on it, (which means) about Rs 500 crore. So, there is a surplus capital of Rs 1,400 crore. Thus, on merger, it should come to the bank.
“After allocating Rs 500 crore capital for Clix’s assets, the bank will be left with a surplus shareholders’ fund of about Rs 1,400 crore from Clix, for use on the bank’s assets. This fund is sufficient for the bank. On the top of this, the bank’s advisors have also received interest from other investors to the tune of Rs 1,000 crore,” he added. PTI
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