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Lakshmi Vilas Bank’s (LVB) board on Monday approved a proposal for an allotment of 1.68 crore shares on a preferential basis to lndiabulls Housing Finance Ltd at ₹112 per share. The allotment, comprising 4.99 per cent of the bank’s equity, will be at 41 per cent premium to the existing share price of LVB.
The transaction will result in LVB receiving a fund infusion of ₹190 crore from Indiabulls. India Bulls will pump in another ₹200 crore through tier-I bonds, taking the total amount to ₹390 crore. LVB had already raised ₹460 crore through a QIP issue in March.
“The bank is adequately capitalised for the next few quarters. The preferential allotment signals the confidence of Indiabulls in LVB, and this can create a positive impact on the proposed merger,” said a senior banking official.
On April 5, LVB’s board approved the merger of the private sector lender with Indiabulls Housing Finance through a share swap deal. The merger will help Indiabulls get access to low-cost stable funds and an entry into banking. The company, the nation’s second largest housing finance firm, had unsuccessfully applied for a banking licence in 2013.
The merger will also enable Tamil Nadu-based LVB to obtain a larger geographical presence.
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