Lakshmi Vilas Bank looks to raise funds

Private sector lender Lakshmi Vilas BankBSE -0.45 % is looking to raise fresh equity capital as much as Rs 1,000 crore by September but the volatile market may play a party pooper. 

The Chennai-based bank is in talks with institutional investors as it is growing its loan book at 15% rate. The bank managing director Parthasarathi Mukherjee said the bank needs capital to keep the growth momentum. 

International investors such as Morgan Stanley Investment Managers and ChrysCapital have recently had a meeting with the bank’s top management. Local investors like Aviva Life Insurance Company, ICICI Prudential Mutual Fund, Kotak Mutual Fund and HDFC Mutual Fund have also met Mukherjee and executive director N Venkatesh, the bank informed the stock exchanges in two separate filings on August 11 and August 3. 

The volatile market has however kept the bank management guessing with the bank stock price falling about 13% in a month to Rs 178 on BSE, upsetting the pricing of the proposed qualified institutional placement (QIP). 

According to Securities & Exchange Board of India rule, the pricing of the equity shares for qualified institutional placement is being arrived at by taking the average of weekly highs and weekly lows of the closing prices for six months or during the fortnight preceding the relevant date, whichever is higher. 

“The bank is well capitalised but the rise in gross NPAs (to 3.78% as on June from 2.67% a quarter back) in the first quarter is a concern and the bank may need more capital to cover it in the future. More capital may also be needed since it is chasing an aggressive retail and SME growth plan with opening of more branches,” said Sanjeev Jain, associate vice president at Ashika Stock Broking. 

Earlier in January, the bank raised Rs 167 crore in a share-sell to institutional buyers at Rs 140 per equity share of face value Rs 10. 

The bank said its gross advances grew 15% Rs 23,236 crore as on June 30, from Rs 20,182.72 crore a year earlier. Its total business rose 14% to Rs 52,712 crore. It has reported 9% rise in net profit at Rs 66 crore for the first quarter. 

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