Indiabulls expects regulator's nod on merger with LVB in 2 months

Proposes Sameer Gehlaut as non-executive chairman and Gagan Banga as MD and CEO of the amalgamated bank

Indiabulls Housing Finance Limited has said it expects the regulator to take a decision on its merger plan with Lakshmi Vilas Bank in the next two months. The company has proposed Sameer Gehlaut as the non-executive chairman and Gagan Banga as the MD and CEO of the amalgamated bank.  

The Competition Commission of India (CCI) had given its green light to the proposed merger of Indiabulls Housing Finance (IBHFL) and Indiabulls Commercial Credit (ICCL) with Lakshmi Vilas Bank (LVB) in June 2019. 

"Application for approval of merger has been made to RBI, NSE and BSE. We look forward to a decision from the regulator on our merger application in the next 45 to 60 days," said Indiabulls.  

The housing finance company said that to ensure continuity, the board of directors of IBH has recommended that Gehlaut be proposed as the non-executive chairman and Banga as the MD and CEO of the amalgamated bank. 

The amalgamated bank will focus on MSME/LAP loans and housing loans business opportunities. 

The proposed plan is to merge Indiabulls Housing Finance Ltd and its wholly-owned subsidiary, Indiabulls Commercial Credit Ltd, with Lakshmi Vilas Bank. IBHFL will hold around 90.5 per cent of the post-merger enhanced equity capital of the merged entity, while shareholders of LVB will hold around 9.5 per cent.

During the year 2019-20, the bank has raised capital and issued 1,68,00,000 equity shares of face value of Rs 10 each, at a price of Rs 112 per share (including a premium of Rs 102 per share) aggregating to Rs 188.16 crore, on a preferential basis to Indiabulls Housing Finance Limited. The bank made the aforementioned allotment on July 4, 2019.

The net loss of Lakshmi Vilas Bank Ltd has widened to Rs 237.25 crore during the quarter ended June 30, 2019, as compared to a net loss of Rs 123.86 crore during the same quarter of the last year. The total income declined 14 per cent during the period to Rs 677.17 crore, as against Rs 787.5 crore registered during the corresponding period last year.

The gross non-performing assets (NPA) as a percentage of gross advances stood at 17.30 per cent (Rs 3,556.57 crore) during the three months ended June 2019, when compared to 10.73 per cent (Rs 2,804.71 crore) in the same period of the previous year. Net NPA grew to 8.30 per cent (Rs 1,539.40 crore) as compared to 5.96 per cent (Rs 1,478.09 crore) in the same period of last year.

LVB's exposure to Cafe Coffee Day

The bank has said that it is pursuing recoveries, while assessing the impact of the probable losses, if any, related to the loans offered based on the personal guarantee of late V G Siddhartha, the founder of the Coffee Day Group of companies. 

The total outstanding under the above facilities remained standard assets in the books of the bank as on June 30, 2019. While it has no exposure on Cafe Coffee Day (CCD) or its subsidiaries, it has funded the coffee growers and suppliers of coffee beans to Cofee Day Global Limited (CDGL), in the normal course of business against the receivables from CDGL. In addition, the bank has funded Kumergode Estate Ltd and Malavika Hegde, and these two loans are backed by collaterals of fixed deposits, land and fixed assets, said the bank.