BoB plans Rs 1,600 cr public issue

Likely to offer 7.10 crore equity shares in its follow-up public offer.

It is raining public issues for banks. Less than a week after ICICI Bank's and Union Bank's decision to go in for public floats, Bank of Baroda (BoB) yesterday said it planned to issue up to 7.10 crore equity shares in its follow-up public offer. This will result in the bank raising around Rs 1,600 crore.

The bank's shares today closed at Rs 234.50, up 4.25 per cent, on the National Stock Exchange. The government's stake in BoB will fall to 53.81 per cent from 66.8 per cent now, after the 100 per cent book-built issue. The price band for the issue will be decided later.

Union Bank plans to issue 4.5 crore shares to raise around Rs 600 crore, while ICICI Bank will decide on the details of the issue at its board meeting on October 13. Analysts expect ICICI Bank to announce a mega-issue of over Rs 6,000 crore.

ICICI's issue will be the second in as many years. In April 2004, it had raised Rs 3,050 crore at a price of Rs 280 per share. ICICI's capital adequacy ratio (12.04 per cent on June 30) is "thin" despite the equity capital it raised in 2004. The bank's asset base has been growing by over 40 per cent annually with retail assets increasing by as much as 70 per cent.

The bank needed to raise a good sum to fund its aggressive growth plans, analysts said. BoB will allocate as much as 50 per cent of the net issue on a proportionate basis to qualified institutional buyers (QIBs), including 5 per cent of the QIB portion for mutual funds.

Not less than 35 per cent of the issue will be available for allocation on a proportionate basis to retail individual bidders.