Board of Lakshmi Vilas Bank on Friday approved merger with Indiabulls Housing Finance in a through a share swap deal, both companies said in separate regulatory filings.
Board of Lakshmi Vilas Bank on Friday approved merger with Indiabulls Housing Finance in a through a share swap deal, both companies said in separate regulatory filings. The shareholders of the private sector lender will get 0.14 share of Indiabulls Housing Finance for every 1 equity share held. The given merger is subject to the Reserve Bank of India (RBI) approval and all other compliances under the Banking Regulation Act, the Tamil Nadu-based bank said.
“The merger will create a stable low-cost funding in the form of public deposits and expanded distribution franchise,” Indiabulls Housing Finance said in the statement.
“The Board of Directors of Indiabulls Housing Finance Limited (“Board”), at its meeting held today (i.e. 5th April, 2019) at Mumbai, after considering the report of the Audit committee of Directors of Indiabulls Housing Finance Limited, has considered and approved a scheme of amalgamation between Indiabulls Housing Finance Limited (“the Company”or “IBH” or “Transferee Company”) and The Lakshmi Vilas Bank Limited, the bank said.
The merger between Indiabulls Housing Finance and Lakshmi Vilas Bank is a welcome move, said Deepak Parekh, Chairman , HDFC. “It’s a good move for the financial sector where an NBFC is merging with a bank”, he told CNBC TV18.
The shares of Lakshmi Vilas Bank closed at Rs 92.75 , up 4.98 per cent, while stock of Indiabulls Housing Finance ended the day 0.53 per cent up at Rs 903.15 on the BSE.
According to the deal, for every 100 shares of Lakshmi Vilas Bank, the shareholders will get 14 shares of Indiabulls Housing Finance.
Lakshmi Vilas Bank said that it “believes that the merger of such two organisations…will create a large and healthy diverse retail asset book, high capital base for strong growth, huge opportunity to foray into newer businesses that may increase the risk fee income base of amalgamated entity such as wealth management, asset management and securities, tap into varied but experienced management and skilled personnel to develop a successful capital accretive model”.