MUMBAI: Competition Commission of India’s (CCI) approval for the proposed merger of Indiabulls Housing Finance and Indiabulls Commercial Credit with Lakshmi Vilas Bank enthused Dalal Street, with the bank’s stock hitting 10 per cent on Friday. CCI approval takes the merger one step closer to fructification, a crucial step for both the entities.
LVB’s shares closed at Rs 63.50, up Rs 5.75 a share or around 10 per cent on BSE, from its previous close. Indiabulls shares also rose 2 per cent or Rs 12.10 a share to close at Rs 612.05.
“In this regard, we would like to inform you that the Competition Commission of India (CCI) has, by way of its letter dated June 20, 2019, intimated that CCI, at its meeting held on June 20, 2019, considered the proposed combination (Comb Reg. No. (C-2019/05/662) and approved the same under sub-section (1) of Section 31 of the Competition Act, 2002,” Lakshmi Vilas Bank said in a regulatory filing.
While the CCI approval has been an easy step in the merger process, all eyes are on the crucial approval from the banking sector regulator, Reserve Bank of India.
Indiabulls’ real estate business was seen as a hurdle to getting the RBI nod, as the regulator has been wary of any exposure to real estate. To overcome the hurdle, Indiabulls Real Estate has sought to exit realty business, and announced sale of 14 per cent stake to Bengaluru-based Embassy Group for Rs 950 crore recently.
Karur-based LVB decided to merge with the Gurugram-based housing finance company in search of capital support after having run up bad loans, and Indiabulls in turn was seeking the low-cost deposit franchise of a bank. As per the proposed scheme, LVB shareholders would get 14 shares of Indiabulls Housing Finance for every 100 shares of LVB.