Lakshmi Vilas Bank says due diligence 'substantially complete' for Clix Group merger

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Private sector lender Lakshmi Vilas Bank on September 15 said the mutual due diligence process for merger with Clix Group is substantially complete and both parties are in discussions on the next steps.

“We wish to inform that the mutual due diligence is substantially complete, and the parties are in discussions on the next steps. The Bank will continue to share any further information as and when they materialize,” the bank said in a communication to exchanges.

Earlier, the bank had signed a preliminary, non-binding letter of intent (LOI) with Clix Capital Services Private Limited and Clix Finance India Private Limited as on June 15, 2020, in relation to the proposed amalgamation of Clix Group with the bank.

Under the non-binding LOI, the proposed amalgamation is subject to completion of mutual due-diligence, regulatory and other customary approvals. As per the mutual understanding between parties, the exclusivity period was extended till September 15 due to the prevailing pandemic situation.

With NPAs high and CAR inadequate, the RBI had put the bank under watch in September last year. The bank was pinning its hopes on Indiabulls deal last year for a possible merger but the RBI had rejected the merger in October last year without citing a reason.

In October last year, rating agency CARE had downgraded Lakshmi Vilas Bank’s bond programme of Rs 318 crore to BB+ with negative outlook from BBB-. The bank was put under prompt corrective action (PCA) by the RBI after high level of bad loans, insufficient capital adequacy ratio, negative return on assets (RoA) for two consecutive years and high leverage. The RBI took this decision after assessing the deterioration in FY19 numbers.

Clix Capital is into financial services offering various types of loans and is headed by Pramod Bhasin who acquired the business in 2016 from GE Capital. Private equity firm AION Capital Partners is a significant shareholder in the company.

Early this month, Lakshmi Vilas said it plans to raise up to Rs 1,500 crore to fund business growth and increase foreign shareholding to up to 74 percent.