Close on the heels of the Union Bank of India's initial public offer (IPO), two more public sector banks --Canara Bank and Allahabad bank -- are set the hit the equity market to raise Rs 540 crore. Both the banks have filed offer documents with the Securities and Exchange Board of India (Sebi).
The Bangalore-headquartered Canara Bank expects to raise anywhere between Rs 385 crore and Rs 440 crore through the IPO while the Kolkata-based Allahabad Bank will raise Rs 100 crore.
Canara Bank is planning a premium issue --aiming at a premium of Rs 25-30 a share on a face value of Rs 10. Allahabad Bank, in contrast, is set to come out with an at par issue.
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After the IPO, the government's stake in Allahabad Bank will come down to 71 per cent. Canara Bank, which has been planning to return part of its capital to the government, may see the government's stake fall to a little below 70 per cent after its public issue.
After the IPOs of these two banks, only five nationalised banks will remain 100 per cent government-owned. They are Uco and United Bank of India in Kolkata, Central Bank of India in Mumbai, Indian Bank in Chennai and Punjab & Sind Bank in Delhi. SBI Capital Markets has been appointed the lead manager for the Allahabad Bank IPO while I-Sec will handle the Canara Bank issue.
Allahabad Bank is reserving 10 per cent of the issue for its employees. It is offering for subscription 10 crore equity shares of Rs 10 each for cash at par aggregating Rs 100 crore. The bank said the present issue of equity shares is being made to augment its capital base and raise long-term resources.
Canara Bank has an equity base of Rs 577.86 crore. Its capital adequacy ratio (CAR) was 11.88 per cent on March 31, 2002. It posted a net profit of Rs 741 crore last year.
Allahabad Bank has an equity base of Rs 246.70 crore with a CAR of 10.62 per cent in March 2002. It posted a net profit of Rs 80.21 crore last year. Union bank of India's Rs 266 crore IPO was oversubscribed around 5.5 times. It is likely to be listed on September 24. The Union Bank issue was priced at Rs 16.