Indian Bank eyes Rs 900 cr via IPO

Chennai-based Indian Bank, which has entered into a strategic alliance with Oriental Bank of Commerce and Corporation Bank, is likely to raise over Rs 900 crore from its initial public offer (IPO) likely to be completed by the end of January 2007.

The IPO of 8,59,50,000 equity shares will reduce the government's holding to 80 per cent from the current 100 per cent. The upper end of the price band is expected to be set at Rs 105 or Rs 110 a share, merchant banking sources said.

The book value as on September 30, 2006 was Rs 64.03 a share, up from Rs 30.49 at the end of March 31, 2006. The book value per share of the bank was less than Rs 5 in all the preceding three years. Most bank stocks are trading at a price-to-earnings multiple of around

The bank has 1,408 branches across the country with a large number of them in the Tamil Nadu. It also has a branch in Singapore and a branch and foreign currency banking unit in Colombo.

In the half-year ended September 30, 2006, the bank reported a net profit of Rs 334 crore against Rs 489 crore for the whole of 2005-06. Its net worth as on September 30, 2006 was Rs 2,601.68 crore with assets of Rs 50,812.97 crore.

The bank said the three-bank strategic alliance, called OIC Alliance, has been formed "to face the challenges of consolidation, convergence and competition without sacrificing the legal identity of the banks.

Some areas of cooperation that have been agreed upon by the three banks are sharing IT resources and treasury resources, building e-payment systems, bancassurance, forming business syndicates, sharing training resources, accessing the capital market and other financial ventures.

The OIC Alliance has already made progress in coordinating gold sales, finalising remittance arrangements, sharing of ATMs and joint participation in infrastructure financing.