Capital starved-Lakshmi Vilas Bank (LVB) has a received preliminary, non-binding letter of intent (Loi) from Clix Capital Services Private Limited & Clix Finance India Private Limited dated June 12, 2020. Clix Capital and Clix Finance are non-banking finance companies backed by AION Capital. The private-equity player, through its non-banking financial arms, is set to lead the deal as it looks to buy over a 51 per cent stake for around Rs 1,400-1,600 crore.
If the deal happens, it would be the second in which an investor takes a majority stake in a private bank beyond the current permissible limit of 26 per cent. It may be recalled that in 2018 Fairfax had acquired a 51 per cent stake in CSB Ltd (formerly Catholic Syrian Bank) for about Rs 1,200 crore. This is the first stake sale of an Indian bank to a foreign non-banking entity since the RBI tweaked ownership norms in May 2017.
While Bank’s MD & CEO Sundar refused to give any information, sources said that Clix will infuse Rs 1,400-1,600 crore for 51 per cent stake, though the investor is ready to take the stake up to 74 per cent, by roping in another investor. Besides, some existing investors may also pump equity into the bank to retain their stakes at current levels, taking the entire amount of capital infusion to around Rs 3,000 crore.
LVB today said that it has a received preliminary, non-binding letter of intent (Loi) from Clix Capital Services PVt Limited & Clix Finance India Pvt dated June 12, 2020, which the Board of Directors of the Bank has considered for further processing in their meeting held today (June 15, 2020).
Under the non-binding LOI, the proposed transaction is subject to completion of due diligence, which the lender and the intending parties will carry out. The deal will also be subject to regulatory and other customary approvals, said the bank. Clix Capital and Clix Finance are said to begin due diligence on LVB next week and in 2-4 weeks from then will make a formal application to RBI to approve the deal.
In October 2019, Reserve Bank of India (RBI) rejected a proposal for amalgamation of Indiabulls Housing Finance Ltd (IBHFL) and its subsidiary with LVB. Post this, the bank started looking for new investors.