M&A Magazine

After a lot of scrutiny, Reserve Bank of India (RBI) finally rejected the proposed merger between Chennai-based Lakshmi Vilas Bank ( LVB ) and Gurugram-based Indiabulls Housing Finance Limited ( IBHFL ). The proposed merger plan was crucial for Lakshmi Vilas Bank as it would have helped it raise capital, which is required to lift the PCA restrictions currently imposed on it by the central bank. Indiabulls Housing Finance Ltd said in a statement that it will do a buyback of equity shares of the company, for which it has called a board meeting on October 14. In June this year, the Competition Commission of India (CCI) had given its nod to the proposed amalgamation. In fact, RBI had placed Lakshmi Vilas Bank under prompt corrective action (PCA) due to a high level of non-performing assets of the bank. IBHFL and LVB had proposed a merger between the two in April in a share-swap deal under which LVB shareholders would get 14 shares of IBHFL for every 100 equity shares held in the ban...

Taking ahead the growing trend of  consolidation  in the financial sector a step further, Chennai-based  Lakshmi Vilas Bank  (LVB) will merge with Gurugram-based  Indiabulls Housing Finance Ltd , one of the fastest growing mortgage lender, in an all share-swap deal. In the proposed deal, the shareholders of  LVB  will get 14 shares of Indiabulls Housing Finance Ltd ( IBHFL ) for every 100 equity shares held in the bank. The deal implies a 36% premium to the closing price of LVB on April 5, 2019 and 63% premium to the bank’s last six months’ average price. The merged entity would have a net worth of Rs 19,472 crore and a loan book of Rs 1.23 lakh crore as of December 2008. Also, the entity’s capital adequacy ratio will be 20.6%. At present, IBHFL’s market capitalisation is 13 times that of LVB. The merger is expected to take 6 to 12 months as it would require regulatory approvals from RBI, National Housing Bank, CCI, SEBI and NCLT. The new entity wo...