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Mid-sized private sector lender Lakshmi Vilas Bank (LVB) is planning to raise ₹500-700 crore through a qualified institutional placement (QIP) in February. The QIP is part of its larger plan of raising about ₹2,000 crore through various modes, primarily through a preferential allotment of shares and QIPs.
The Chennai-based lender is expected to launch the QIP after its third quarter results and the mandatory silent period associated with it in February itself, sources close to the development told BusinessLine . According to a regulatory filing on January 29, the bank’s board is scheduled to meet on February 4 to approve third quarter results.
“The bank intends to use the funds largely to beef up its tier-I ratio, to increase the provision coverage, and enable the lender grow its business. At present, the bank is short of capital and is not able to grow the capital,” one of the sources said.
“The bank’s business is shrinking as it did not raise any capital earlier,” another source said, adding it had earlier secured a board approval for the entire fund-raising.
Ropes in KPMG
LVB is yet to finalise a merchant banker for the QIP, which would be done depending on the region and demand from potential investors.
“This would happen in the next few days,” the first source added.
The lender, which had earlier received a board approval for the entire ₹2,000-crore fund-raising, had also conducted a couple of road shows.
LVB is also in talks with many investors for preferential allotment of shares, to raise the remaining ₹1,300-1,500 crore.
The sources declined to be identified before a formal announcement is made; LVB officials too declined comment.
The lender, which had earlier raised ₹800 crore through a rights issue, roped in KPMG to assess its overall operations.
The decision to raise funds was based on a due diligence done by KPMG.
Earlier in September, the bank had announced its decision to raise about ₹2,000 crore in fresh equity before the end of the current fiscal.
It had appointed JP Morgan Chase for the process.
The bank had also set a target of recovering ₹800-1,000 crore from defaulters this fiscal.
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