The bank is taking the QIP route after its proposed follow on public issue was aborted.
It is planning to issue and allot 80 million equity shares of face value of Rs 10 each in one or more tranches by way of QIP to the public sector enterprises and mutual funds who are qualified institutional buyers as prescribed SEBI guidelines.
The pricing of the equity shares will be determined on May 24 in accordance with SEBI DIP (disclosure and investor protection) guidelines (thirty days prior to the meeting), the bank informed the Bombay Stock Exchange (BSE) today. The equity shares will be listed on the BSE.
George Joseph, Executive Director, Syndicate Bank had told reporters yesterday that the bank was waiting for the approval from the Union government for the QIP programme.
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"Our proposal for a follow-on public offer was not completely rejected by the government. We have many options to raise funds including QIP and FPO. We prefer to go for a QIP issue and our proposal is under the consideration of the government. Currently, we have sufficient capital to take care of our requirements till September and we hope to get approval for QIP issue during the first quarter," he said.
To cater to its increasingly growing business level as well as to comply with Basel-II norms the bank needs additional capital during the current financial year. Though the Bank has comfortable capital adequacy ratio of 11.74 per cent and 11.22 per cent at the end of March 2007 and March 2008 respectively, its business growth during the current year as well as that for the coming years calls for higher capital, particularly Tier-I caital.
He said the bank is also planning to raise capital through a medium term notes (MTN) programme. "We are closely monitoring the global markets which are not encouraging currently. We have legal due diligence. While we have set up a $500 million MTN programme, we are eligible to raise upto $155 million under both tier-I and tier-II combination and we will stick to that," Joseph added.
Currently, the government is holding 67 per cent stake in Syndicate Bank.