Merger of Lakshmi Vilas Bank with Indiabulls Housing Finance Finalises

As the business in non-bank lenders are surging, with this the cost of raising funds from the market was low. There is tougher market conditions brought back attention of the board of Lakshmi Vilas Bank approved to merge with Indiabulls Housing Finance (IBH) through a share swap deal. The merger will help Indiabulls get access to low-cost stable funds and an entry into banking.

Indiabulls is the nation’s second largest housing finance firm, had unsuccessfully applied for a banking licence in 2013. The merger will also enable Tamil Nadu-based LVB to obtain a larger geographical presence. The merged entity will have a net worth ₹19,472 crore and a loan book ₹l,23,393 crore for the nine months of FY19. Its employee strength will stand at over 14,300.

The amalgamation comes at a time when housing finance companies are facing liquidity issues and slowdown in loan disbursements after the IL&FS debacle. Consolidation process of the banking industry is on the move and has witnessed recently of the merger of GRUH Finance with Bandhan Bank, Capital First with IDFC Bank and Bharat Financial Inclusion with IndusInd Bank.

Sameer Gehlaut is to be the Vice-Chairman of the merger entity. IBH’s Vice-Chairman and Managing Director Gagan Banga and LVB’s Managing Director Parthasarathi Mukherjee are proposed to be Joint MDs and IBH’s board has constituted a reorganisation committee headed by independent director and former RBI Deputy Governor SS Mundra.