Promoters of the Lakshmi Vilas Bank (LVB), one of the old generation private sector banks in the country, has increased their stake to a tad lower than 10% as of the quarter ending June this year. LVB was one of those seven private sector banks in which promoters holding was less than 1% till the December quarter.
Market sources said the promoters seem to have lapped up the stocks from the secondary market in small tranches between December and June quarter through a string of promoter group companies to hike their stake to fend off any possible hostile bid for the control of the bank. The less than 1% holding by promoters have always put the bank in news as a possible take-over target.
?LVB promoters seem to have slowly fencing the bank from any potential hostile bids once the Reserve Bank come out with its promised policy on the ownership structure of the private banks including the foreign holdings?, an analyst with a fund house, who did not wish to be named told FE. LVB stock closed on NSE on Wednesday at Rs 111.50, up by 1.83%. The stock has an yearly high of Rs 124.80 and a yearly low of Rs 70.
According to information available with FE, as of the end of December, 2009, the 22 -odd promoter entities were together holding a paltry 0.82% in LVB. However, as of quarter ended June 2010, the stake of the promoter entities have gone up to a tad lower than 10% to 9.73%. Also, the number of promoter group entities had gone up to 48 as on June, 2010 from 22 in December last.
According to sources, the promoters have used a string of entities controlled by them to enhance the stake in LVB. The additional stake has been bought through 17 odd entities acting as persons acting in concert (PAC?s). Of which, only three were holding above 1% stake in the bank. These are KR Pradeep (1.40%), Ariston Capital Asset Holdings Pvt Ltd (1.76%), and Pranava Electronics Pvt Ltd which holds 2.27% of the equity capital of the bank. The other top three promoters of LVB are Karur Vysya Bank (3.93%), Indian Bank (3.80%) and Federal Bank (3.77%).
Incorporated in 1926, LVB is one among the old generation private sector banks in the country and has a network of 273 branches spread across 18 states. As of year ending March 31, 2010, the bank had grossed a total income of Rs 1,012.88 crore and posted a net profit of Rs 30.65 crore. LVB is planning to raise up to Rs 40 crore by way of issuing fresh shares either by Qualified Institutional Placement (QIP) or by issuing Global Depositary Receipts (GRDs), American Depository Receipts (ADRs) or an FPO at the yet to be arrived price.