Today morning’s newspaper, Economic Times, carried the news that Lakshmi Vilas Bank has initiated talks with several investors, both financial and strategic,for selling up to 26% equity to mobilise funds for expansion.
It even went on to say that last week, it hired JP Morgan & Chase to look at various strategic options. It also added that initial discussions with foreign banks like Singapore’s DBS and private equity funds such as TrueNorth, Carlyle and Blackstone have also taken place, with possibility of tapping large industrial houses, such as the Tatas and the Birlas, for a potential deal.
The market reacted very positively to this news and in the morning session, the stock price surged almost 10% to Rs.105.15, a three month high.
The stock exchange had asked the Bank for clarification on this news and the company got back before market closure, stating the news was factually incorrect and has no basis. It stated that the bank is not into any negotiation with any specific investor for the particular capital rise indicated in the media report. It stated that the bank has not yet appointed any investment advisor for drawing up a capital raising plan for Bank.
The market seems unmindful of this clarification and the stock price continued to remain in the green at Rs.103 levels.