Lakshmi Vilas Bank jumps 4% as board to consider rights issue

NEW DELHI: Shares of Lakshmi Vilas Bank rose 4 per cent in Tuesday’s trade after the bank said it would consider a rights issue on October 15.
“A meeting of the board will be held Thursday to consider and approve the issue of securities of the bank to existing shareholders of the bank on rights issue,” the bank said in a regulatory filing.

The stock rose 4.31 per cent to hit a high of Rs 19.35 on BSE. The scrip has fallen 12 per cent in the last one month and 20.47 per cent in the last three months.

At the prevailing price, the stock trades at 0.51 times its trailing 12-month price-to-book value.

As per a resolution passed by its board and shareholders in August and September respectively, the bank has got approval for raising funds by way of equity shares and other instruments through various modes, including further public offer, rights issue or qualified institutions placement for an aggregate amount of up to Rs 1,000 crore.

Last week, the lender said it has received a non-binding offer from Aion-backed non-banking finance company Clix group for a merger. On September 25, the lender’s its shareholders voted out seven directors on its board, including CEO S Sundar and promoters K R Pradeep and N Saiprasad.

Following this, the Reserve Bank of India (RBI) appointed a three-member team to run the bank under Meeta Makhan as chairperson and Shakti Sinha and Satish Kumar Kalra as members.

If the merger with Clix materialises, the net worth of the bank will more than double to Rs 3,100 crore from the current Rs 1,200 crore. Clix Capital has a net worth of Rs 1,900 crore that will become the net worth of the bank after the deal.

The lender has been dogged by high bad loans and the attendant regulatory curbs since 2019. In September, its board had approved fundraising plans for Rs 1,500 crore and also to increase foreign shareholding to up to 74 per cent from 12.35 per cent.

The bank had posted a net loss of Rs 112.28 crore in the June 2020 quarter.

Almost a fourth of its advances are dud assets now, with gross non-performing assets of 25.40 per cent as of June-end, against 17.30 per cent a year ago.

Credit: Stocks-Markets-Economic Times

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