Taking ahead the growing trend of consolidation in the financial sector a step further, Chennai-based Lakshmi Vilas Bank (LVB) will merge with Gurugram based Indiabulls Housing Finance Ltd, one of the fastest growing mortgage lender, in an all share-swap deal.
In the proposed deal, the shareholders of LVB will get 14 shares of Indiabulls Housing Finance Ltd (IBHFL) for every 100 equity shares held in the bank.
The deal implies a 36% premium to the closing price of LVB on April 5, 2019 and 63% premium to the bank's last six months' average price. The merged entity would have a net worth of Rs 19,472 crore and a loan book of Rs 1.23 lakh crore as of December 2008. Also, the entity's capital adequacy ratio will be 20.6%. At present, IBHFL's market capitalisation is 13 times that of LVB. The merger is expected to take 6 to 12 months as it would require regulatory approvals from RBI, National Housing Bank, CCI, SEBI and NCLT. The new entity would likely to be headed by Sameer Gehlaut, the current chairman of IBHFL He would be designated as vicechairman. Parthasarathi Mukherjee, current MD of the bank will become the joint managing director.
The merger comes at a time when nonbanking finance companies (NBFCs), especially housing finance companies, are facing liquidity issues and slowdown in loan disbursement. The proposed deal will be the fourth consolidation between a bank and a NBFC in the last one-and-half year. In October 2017, IndusInd Bank had announced it would merge Bharat Financial Inclusion with itself. The deal is likely to be completed shortly. Also, in January last year IDFC bank announced that it will acquire non-banking finance company Capital First. The final amalgamation was done in December last year. And three months ago Bandhan Bank announced merger of Gruh Finance (a housing finance company) with itself. The deal has now received regulatory approval from Reserve Bank of India (RBI). Also, on a slightly different note, the three state-owned banks – Bank of Baroda, Vijaya Bank and Dena Bank – completed their merger this month.
Win-win for both
この記事は M & A Critique の May 2019 版に掲載されています。
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