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Lakshmi Vilas Bank Jumps 16% On Receiving Non-Binding Offer From Clix Group

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Shares of Lakshmi Vilas Bank Ltd. surged 16 percent to an intraday high of Rs 20.70 after the troubled lender in a statement said that it has received an "indicative non-binding offer from Clix Group."

Lakshmi Vilas Bank Jumps 16% On Receiving Non-Binding Offer From Clix Group
 

"Further to the process of considering and evaluating the proposed amalgamation with M/s. Clix Capital Services Private Limited ("Clix Capital"), M/s. Clix Finance India Private Limited ("Clix Finance") and M/s. Clix Housing Finance Private Limited ("Clix Housing") (collectively, the "Clix Group"), we are glad to inform that, the Bank has received an indicative non-binding offer from Clix Group," the statement said.

Without revealing further details on the proposal, the bank said will continue to share information on material developments as and when they materialize.

On 15 June 2020, Lakshmi Vilas Bank said that it had received a preliminary, non-binding letter of intent (LoI) from Clix Capital Services & Clix Finance India (collectively the Clix Group) for an estimated value of Rs 1,900 crore.

Later on 15 September 2020, the bank informed that the mutual due diligence process for the proposed amalgamation of Clix Group with the bank was substantially complete and the parties were in discussions on the next steps.

However, on 25 September, shareholders of the Chennai-based private bank ousted seven directors and auditors at the Annual General Meeting (AGM), which included a vote against the appointment of S Sundar as Lakshmi Vilas' CEO, a candidate approved by the RBI.

Sundar had taken over the position as interim CEO on 1 January after Parthasarthi Mukherjee's resignation a few months earlier. He served as the bank's CFO before taking up the position. A section of shareholders, mainly institutional shareholders, rejected resolutions seeking the appointment of the seven directors as they were extremely unhappy with the mismanagement and lack of governance at the bank that has been grappling with losses and deteriorating deposits.

 

Leaving the 94-year-old private bank headless, the day-to-day affairs of the bank are now run by a Committee of Directors (CoD) composed of three independent directors, approved by RBI, who will exercise the discretionary powers of MD and CEO in the ad interim.

The agreement is crucial for the bank which is in need of capital infusion. If the deal does not materialise, RBI will have to step in.

Notably, Lakshmi Vilas' merger with Indiabulls Housing was rejected by RBI last year.

Read more about: lakshmi vilas bank
Story first published: Friday, October 9, 2020, 14:33 [IST]
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