Lakshmi Vilas Bank plans Rs 265-crore rights issue

Written by Sajan C Kumar | Chennai | Updated: Nov 18 2009, 05:00am hrs
Lakshmi Vilas Bank (LVB) will issue 4,91,64,453 equity shares of Rs 10 each at a premium of Rs 44 per equity share, totaling Rs 265.49 crore on rights basis to the existing equity shareholders in 1:1 ratio. The price of the issue, which opens on November 16 and closes on December 15, is 5.4 times of the face value of the equity shares of the bank.

The bank intends to deploy the net proceeds from the issue to augment its capital base in line with its growth strategy.

According to the bank filing, as of March 31, 2009, the total capital adequacy ratio of the bank was 10.09%, including tier-I capital adequacy ratio of 8.63% and tier-II capital adequacy ratio of 1.46%. Additional capital was required to augment tier-I capital and to achieve uniform credit by maintaining stipulated CRAR.

The bank's business stood at Rs 12,606.73 crore as on March 31, 2009. The bank earned a net profit of Rs 50.30 crore and the net owned funds of the bank reached Rs 453.72 crore. Net non-performing assets of the bank were pegged at 1.24% as on March 31, 2009.

The bank has chalked out a slew of business strategies to increase market share, including opening of specialised branches such as industrial branches, development, SME, NRI and personal banking branches; focusing on enhancing fee-based income mainly through LG/LC business and para-banking activities and charting out customer survey plans.

As part of the strategy, each branch will have to step up their business targets and to achieve those targets consistently and continuously. The bank will go aggressively on branch expansion in vital tier-II and III locations, where the potential was untapped and available in plenty.