BoR to issue preferential shares for Rs 167cr

Bank of Rajasthan (BoR) will raise Rs 166.75 crore through a preferential issue of shares to New York-based hedge fund management company Indus Capital Partners and Delhi-based fund Max India.

The bank informed the Bombay Stock Exchange (BSE) that its shareholders have approved the issue of one crore equity shares at a price of Rs 166.65 per share to the investors on a preferential basis. The bank will issue 65 lakh shares to Indus Capital and 35 lakh to Max India.

The promoters of the bank, the Tayals, collectively hold 44 per cent and have been under pressure from the Reserve Bank of India (RBI) to dilute their holding. RBI guidelines on ownership restrict any entity from owning more than 10 per cent in a bank.

"The fresh issue will lead to 4 per cent dilution in the existing shareholding," Sanjay Kumar Tayal, director (promoter) of BoR, had said earlier.

Speaking about the bank's future capital raising plans, Tayal said, "This is the first tranche of the proposed preferential issue by the bank. The next tranche could be of a similar size and would be issued sometime next year."

The bank will call for an extraordinary general meeting in a couple of months to get approval for the same. "Though we do not require funds immediately, the resources raised through the issue of preferential shares will certainly strengthen the bank and its bottom line," said Tayal.

BoR posted a 30 per cent increase in net profit at Rs 24 crore for the quarter ending September 2007 compared with Rs 19 crore in the corresponding period last year. The bank's shares were trading at Rs 162.8, down 0.06 per cent on the BSE in the morning trade.