Chennai: The board of directors of Lakshmi Vilas Bank (LVB) on Friday approved a scheme of amalgamation with Indiabulls Housing Finance Ltd (IHFL). For every one share of Rs 10 each, the LVB shareholders will receive 0.14 equity share of Rs 2 each of Indiabulls Housing Finance. The amalgamation will be under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 dealing with Companies (compromises, arrangements and amalgamations) Rules 2016, the bank said in a regulatory filing to the BSE.
The appointed date for the scheme shall be January 1, 2018 or such other date as may be mutually agreed between the amalgamating companies and is the date with effect from which the scheme shall be operative, the bank said. The LVB said that the amalgamation will unlock value through synergies that exist exclusively. It will create a large and healthy diverse retail asset book, a high capital base for strong growth and a huge opportunity to foray into newer businesses that may increase the risk-fee income base of the amalgamated entity, it said.
The bank is supposed to get amalgamated into the housing finance company through the merger.But, the deal is subject to approval from shareholders, the Reserve Bank of India, National Housing Bank and the Securities and Exchange Board of India. Additionally, approvals from the Competition Commission, the National Company Law Tribunal and exchanges are also required for the merger to materialise. In the 2014 round of universal bank licence issuance, Indiabulls Housing Finance, which had sought one, had not been granted a licence by the RBI. Approvals, especially from the RBI, will be crucial, as this will be the first time that a bank will be merged into a non-bank entity.