Tuesday, May 11

Lakshmi Vilas Bank shortlists five investors to sell stake

MUMBAI: Five financial investors, including the Blackstone Group, Bain Capital and TPG Capital Management, have been shortlisted to buy a controlling stake in Lakshmi Vilas Bank, reflecting continued private equity interest in the country’s financial services space.

Baring Private Equity Asia and home-grown Gajja Capital are the two other contenders left in the penultimate round to acquire the 92-year-old, South-based bank, multiple sources with knowledge of the matter told ET.

“Our advisers JP Morgan have shortlisted a few of the bidders,” said P Mukherjee, managing director of the bank in an email reply confirming the matter.

The process continues now. The extent of investment and the timing thereof is yet to be worked out,” he said.

The non-binding offers are in the range of Rs 140 to Rs 160 per share, valuing the private sector lending between Rs 3,592 crore and Rs 4106 crore, sources said. Offers are at a considerable premium to Monday’s closing price of Rs 89.5 a share.

Bidders have started due diligence and final offers are due by the second week of November, sources said. J.P. Morgan & Chase is running a formal process to find a buyer.

The target bank and their prospective bidders – Blackstone Group, Bain Capital and TPG Capital Management, Baring and Gajja Capital – did not comment.

The five bidders were shortlisted from as many as 15 investors that have shown initial interest. This included Carlyle Group, Aion Capital, a joint venture between Apollo Global management and ICICI Venture, True North and General Atlantic, besides strategic players such as DBS.

The successful investor will have to make an open offer to the public shareholders of the bank.

ET first reported on May 28 that Lakshmi Vilas Bank has hired JP Morgan to find a buyer for a controlling interest in the lender and has received indicative interests from private equity funds and DBS.

The deal is expected to close by November end and will be on the lines of the Fairfax Financial Holding’s investment in Kerala-based Catholic Cyrian Bank. The Fairfax deal was the first in which a foreign investor picked up a controlling stake in a private bank after the central bank tweaked norms for banking sector takeovers in May 2017.

In November 2017, Lakshmi Vilas raised Rs 800 crore through a rights issue of shares. The promoters only hold 9.03 percent in the widely held bank, with public shareholders — that would include foreign portfolio investors and financial institutions — holding the remaining 90.97 percent.

The bank was founded in 1926 by seven businessmen from Karur, Tamil Nadu, under the leadership of VSN Ramalinga Chettiar to cater to the financial needs of the people in and around the region.

From being a community bank, Lakshmi Vilas has emerged as a big private sector lender. It currently has 523 branches across the country with a total business volume of Rs 64,000 crore.

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