Lakshmi Vilas board okays merger with Indiabulls HF

Mumbai: Private sector lender Lakshmi Vilas Bank Ltd (LVB) on Friday said that its board had approved a merger with mortgage financier Indiabulls Housing Finance Ltd (IBH). The merged entity would be the country’s eighth largest private sector bank by size and profitability.

According to stock exchange filings, the swap ratio for the merger is 014:1, which means that 14 shares of IBH will be given for every 100 shares of LVB. The merger is subject to regulatory approvals.

“By becoming a bank, IBH is voluntarily submitting itself to come under the direct banking supervision of RBI for all its existing and future businesses,” said a presentation to investors.

The merged entity will be christened as Indiabulls Laxmi Vilas Bank.

IBH promoter Sameer Gehlaut will be the Vice-Chairman of the merged entity, and IBH Vice-Chairman and Managing Director Gagan Banga and LVB Managing Director Parthasarthi Mukherjee will be the joint managing directors.

“This is an amalgamation, not strictly a new bank licence," Banga told a news channel. He expects the merger to be completed in 6-12 months. Indiabulls Housing is a widely held company with over 65 per cent held by institutional investors and the promoter stake is currently at 21.5 per cent, which would drop to 19.5 percent after merger.

As of March 31, LVB had total assets of Rs 40,429 crore and capital and reserves of Rs 2,328 crore, while Indiabulls had an asset base of Rs 1,31,903 crore. According to the investor presentation, the net worth of the amalgamated entity as on December 31, 2018 would be Rs 19,472 crore, loan book of Rs 1,23,393 crore, operating profit of Rs 4,630 for the 9MFY19. The merged entity’s net profit would be 2,455 crore and have a capital adequacy ratio of 20.6 per cent, Gross NPA of 3.5 per cent and Net NPA 2 per cent and have almost 800 branches.

On Friday, shares of LVB closed at Rs 92.75, up 4.98 per cent on the BSE, while IBH shares closed at Rs 903.15, up 0.53 per cent.