Lakshmi Vilas Bank mulls rights issue, follow on offer, QIP, other options to raise Rs 500-700 cr quickly

Troubled private sector lender Lakshmi Vilas Bank (LVB) is exploring all possible options to raise capital, including rights issue, follow on offer and QIP, besides restarting negotiations with Clix Capital for the planned merger.

Shakti Sinha, independent director and part of the three-member committee of directors (CoD) approved by the RBI to run the day-to-day operations of LVB, told FE that the CoD had started hectic parleys to survey all options for capital raise. He said he had discussed the same with financial advisors, stressing that the options should be feasible in the short-term and in terms of the prize and size of the issue.

“Though we are not clear about the size of the issue as of now, we hope to raise anything between Rs 500 crore and Rs 700 crore in the short-term,” said the independent director. According to him, liquidity was not an issue, it was just that Tier-I capital had gone southwards because of the NPAs.

Sinha said the CoD’s immediate priority was to see that the bank was run professionally and fortunately, all the directors were united on the issue. The senior management has also risen to the occasion and all are acting briskly.

“The incident (release of the results pertaining to rejection of seven directors’ re-appointment) happened on late Friday night or early Saturday and by Sunday, we could send out a proposal to RBI, recommending the constitution of a three-member committee to manage our day-to-day affairs. We could get the approval immediately and we are discussing the ways to raise funds, meaning all the necessary actions are on the way,” he said.

On the merger proposal of Clix, Sinha said the directors who had been in talks with the company were no longer associated with the bank and the CoD was being briefed about the contours of the deal afresh.

On the RBI instructions to bring the bank back to normalcy immediately, Sinha said the regulator had not conveyed anything specifically, as the lender was already under prompt corrective action (PCA).

“In the PCA, they (RBI) had put the bank under many restrictions. So, we have made it clear to the top management that whatever the RBI has been asking for, whether it is controlling the capex or curbing the operational expenses or improving the margins, we have to make those actions our priorities,” he said.