Dena public issue in Rs 23-27 band

Eight crore shares of Rs 10 each to be issued in the bank's second public float.

Dena Bank is set to hit the capital markets with its second public issue to raise an additional Rs 80 crore plus premium in mid-January 2005.

The bank will issue eight crore share of Rs 10 each with a price band of Rs 23 to Rs 27, netting Rs 200 crore. The bank has got approval from the Government of India and the Reserve Bank of India (RBI) for dilution of government equity to 51 per cent.

The bank is very optimistic about the participation of foreign institutional investors (FII) in the public issue. The bank has reserved 10 per cent for FIIs and non-resident Indians (NRIs) and another 10 per cent for bank staff. However, the overall FII limit according to RBI may go up to 20 per cent.

The shares would be listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Ahmedabad Stock Exchange (ASE) and the Delhi Stock Exchange (DSE). SBI Capital Markets is the lead manager to the issue and Sharepro Services India has been appointed the registrar.

The government holds 70.99 per cent stake in Dena Bank, while banks, financial institutions and insurance companies hold 7.40 per cent. The balance 21.61 per cent is held by the public.

"As on March 31, this year, the capital adequacy ratio of the bank was 9.48 per cent against 9 per cent prescribed by the RBI. With the second public issue of Rs 80 crore, the bank plans to improve its capital adequacy ratio to about 12 per cent by March, 2005," Anil K Khandelwal, chairman and managing director, Dena Bank.

The bank plans to reduce its gross net performing assets (NPAs) from Rs 1484 crore in March 2004 to Rs 1100 crore by March 2005, mainly through cash recoveries and upgradation of accounts. It hopes to reduce the ratio of net NPAs to net advances to under five per cent by March 31, 2005, from 9.40 per cent in March this year.

The bank is targetting a 20 per cent growth in business by the end of the current financial year. It aims to increase deposits and advances to Rs 22,000 crore and Rs 12,000 crore, respectively.

Priority sector advances constitute 44.64 per cent of the bank's net credit against 40 per cent prescribed by the RBI. Agricultural advances accounted for 18.52 per cent of the net bank credit.

During 2004-05, Dena Bank plans to open around 15 branches and computerise all its 1135 branches. It also proposes to increase the number of ATMs from 101 to 200 and introduce mobile banking and internet banking at 100 branches.

Dena has a referral arrangement with Om Kotak Mahindra Life Insurance for selling life insurance products and with Oriental General Insurance Company for general insurance products.