Lakshmi Vilas Bank hits 5% upper circuit limit on merger proposal by Clix Capital

Shares of Lakshmi Vilas Bank jumped 5 per cent in Tuesday's trade after it received a preliminary proposal from Aion Capital-backed non-banking lender Clix Capital for a merger that will augment the Chennai-based lender's capital base by around Rs 1,900 crore.

Shares of the mid-size private sector lender got locked at 5 per cent upper circuit limit at Rs 16.06 on BSE.

The bank told BSE that it has entered into a non-binding letter of intent with Clix Capital Services and Clix Finance India in relation to the proposed amalgamation.

Aeon Capital, which is promoted by ICICI Ventures and Apollo Global Management, owns 85 per cent stake in Clix Capital Services and Clix Finance India. These two companies were launched by former GE Capital honchos Pramod Bhasin and Anil Chawla.

"Under the non-binding LoI, the proposed amalgamation is subject to completion of mutual due-diligence in an exclusive window of 45 days, and will be subject to regulatory and other customary approvals," the lender said after the board meeting.

The proposal from Clix Group seeks an all-stock deal and a merger with the bank which will lead to the NBFC picking up at least 49 per cent in the Chennai-based bank which has been looking for immediate growth capital since last October when the Reserve Bank turned down a merger proposal with Indiabulls Finance.

If the merger goes through, Clix Capital will own up to 49 per cent in LVB," a source told PTI.

In April 2019, the bank entered into an exclusive agreement with the second-largest pure-play mortgage player Indiabulls Finance for an amalgamation but come October, the Reserve Bank threw out the proposal citing regulatory concerns over the suitor's heavy exposure to realty.