Karnataka Bank to raise Rs 140 crore

Mangalore-headquartered private sector Karnataka Bank will raise Rs 140 crore by divesting 4.99 per cent equity stake to Washington-based International Finace Corporation (IFC).

The bank is issuing 6.37 million fresh shares to IFC at Rs 10 a share at a premium of Rs 209 a share. The bank stock closed at Rs 236 on the BSE on Friday.

"We have drawn up a business plan for the next three years and for that we need funds. According to the Basel-II norms, we need to maintain the capital adequacy ratio above 11 per cent. Although funds raised through this issue will not be sufficient to meet all our business expansion, it will be sufficient for the next 18 months," Karnataka Bank Chairman and Managing Director Ananthakrishna said.

In 2005, the bank had raised Rs 160 crore through a rights issue. The present fund-raising would help the bank maintain its CAR above 11 per cent, he said. The bank's CAR was 12.72 per cent as of June 2007 after the bank raised Rs 120 crore by issuing tier-II bonds in June this year.

The board has also resolved to issue upper tier-II bonds on a private placement basis to IFC for $10 million.

Ananthakrishna said the bank would be holding an extraordinary general body meeting on October 31 to seek the approval for the stake sale to IFC.

The bank reported a net profit of Rs 51.79 crore during the first quarter ended June 30, growth of 41 per cent over the corresponding period last year.

Its total income increased by 22 per cent to Rs 403.67 crore for the quarter. The net interest income during the quarter rose by 30.51 per cent to Rs 124.40 crore.