DCB to raise Rs 225 cr from institutions

The Mumbai-based Development Credit Bank (DCB), which got listed last month, plans to raise Rs 225 crore of additional capital through qualified institutional placement. This will take the bank's net worth to over Rs 500 crore from around Rs 350 crore.

The board of the small-size private sector bank on Monday approved the issue of equity shares of an aggregate amount of up to Rs 225 crore to qualified institutional buyers.

The capital issuance will also help dilute promoter Aga Khan Fund for Economic Development's stake from over 31 per cent to 22-23 per cent.

The bank had raised Rs 186 crore through initial public offering (IPO) earlier last month. After the IPO, the promoter's stake, which was at 58.43 per cent, had come down to 31 per cent.

The RBI has asked DCB to reduce the promoter's stake to 10 per cent, the maximum permitted, by March 31, 2007.

"With this issue, the promoter's holding will come down to 22-23 per cent," said Gautam Vir, managing director and CEO.

The board has also approved increasing the ceiling on holdings by foreign institutional investors (FIIs) in the bank to 49 per cent from the existing 24 per cent of the bank's paid-up capital.

The board will convene an extraordinary general meeting of the bank's shareholders on December 15 to seek approval for the fresh share issuance and to raise the ceiling of FII holding.