ING Vysya Bank on Wednesday announced that it had raised Rs 415 crore by way of a qualified institutional placement (QIP) and preferential allotment to its principal promoter, ING Group, the Dutch banking and insurance giant.
The move is aimed at helping the bank fund its expansion plans. “We will use the money to fund our expansion plans. The main objective is to augment our capital adequacy ratio and Tier-I capital. We are a fairly large-sized private sector bank with 480 branches. We have a strong presence in south India and we plan to grow outside south India. We propose to open another 60 branches in the next one year. The intention is to give enough capital for organic growth and not to come back to the market in a short span of time,”Shailendra Bhandari, managing director, ING Vysya Bank, said.
The bank intends to further grow its retail portfolio, including loans to small and medium enterprises (SMEs).
Currently, the retail lending stands at 60 per cent of the total advances and the balance comes from the corporate sector. As of June 30, 2009, the bank's total advances were Rs 16,150 crore and deposits at Rs 22,600 crore. The bank expects to grow by around 20 per cent during the current financial year.
“In the first half of the year, the industry has seen a zero to negative growth. The industry is expecting a pick-up in the demand for funds in the second half of this year. We hope to do better than the market,” he added.
The bank completed a QIP issue by raising Rs 230 crore through an issue of 9.2 million equity shares of Rs 10 each at a price of Rs 248.10 per equity share placed with qualified institutional buyers (QIBs).
A preferential allotment of 7.4 million equity shares will be made to the ING Group, at the same price, which will enable the Dutch banking and insurance giant ING Group to maintain its stake at 43.93 per cent in ING Vysya Bank.
The QIP issue opened on September 7, 2009 and received encouraging demand well above the targeted capital, with a mix of domestic and foreign institutions participating in the process.
With this fund raising, the bank's Tier 1 capital is augmented further. The capital adequacy ratio (CAR) of the bank which stood at 12.5 per cent as on June 30, 2009 will increase to 14.6 per cent, with Tier I CAR at 9.6 per cent from 7.5 per cent. Post-issue, the book value will stand at Rs 173.
For the first quarter ended June 30, 2009 the bank reported a net profit of Rs 60.3 crore, a rise of 48.3 per cent compared to the year-ago period. The total income of the bank during the quarter went up by 22.5 per cent to Rs 742.86 crore compared to the corresponding quarter last year.
