Due diligence on Clix Capital amalgamation substantially complete: LVB

Lakshmi Vilas Bank on Tuesday said due diligence on its proposed amalgamation with mid-sized non-banking lender Clix Capital Group is "substantially complete" and the parties are in discussions on the next steps. "We wish to inform that the mutual due diligence (between the bank and Clix Group) is substantially complete, and the parties are in discussions on the next steps," LVB said in a regulatory filing.

Lakshmi Vilas Bank on Tuesday said due diligence on its proposed amalgamation with mid-sized non-banking lender Clix Capital Group is "substantially complete" and the parties are in discussions on the next steps. The capital-starved Chennai-based bank and the New Delhi-based NBFC had in mid-June this year entered into a non-binding agreement to explore an amalgamation. In late July, the parties had extended the validity of their agreement to September 15 due to the pandemic-driven lockdowns. "We wish to inform that the mutual due diligence (between the bank and Clix Group) is substantially complete, and the parties are in discussions on the next steps," LVB said in a regulatory filing. A board member at LVB told PTI that they will shortly appoint a valuer to finalise the share-swap agreement for the amalgamation. "We hope to get the board approvals by October 10 and then seek the RBI approval," the board member said, adding none of the existing promoters of the bank will exit as part of the amalgamation. To meet its capital requirements, LVB had sought the RBI's nod to amalgamate itself with Indiabulls Housing Finance and Indiabulls Commercial Credit in May 2019. However, the deal could not get regulatory approval because of the RBI's aversion to let realty-focused entities into commercial banking. On June 15, 2020, the bank had signed preliminary, non-binding letter of intent with Clix Capital Services and Clix Finance India for a possible amalgamation with the Clix Group. With the merger, the networth of the bank will more than double to Rs 3,100 crore from the present Rs 1,200 crore. Clix Capital has a networth of Rs 1,900 crore. LVB has been dogged by high bad loans and the attendant regulatory curbs since 2018. Last week, it had said its board has approved fund raising plans for Rs 1,500 crore. The board had also approved increasing foreign shareholding up to 74 per cent from the present 12.35 per cent. The bank would seek shareholders' nod at its annual general meeting on September 25. LVB posted a net loss of Rs 836.04 crore in the year to March 2020. Lakshmi Vilas Bank shares closed 2.2 per cent down at Rs 20.35 on the BSE, giving it a market valuation of Rs 685 crore.