LIC, UTI invest Rs 628 crore in AllBank float

The Life Insurance Corporation of India (LIC) and the Unit Trust of India (UTI) have subscribed to the Allahabad Bank second public issue to the full extent they were eligible for, which was 3.83 crore shares apiece.

The two institutions have thus invested Rs 628.12 crore considering that the float price was fixed at Rs 82 today.

"We have fixed the upper band at Rs 82, which will allow us to raise Rs 820 crore," said O N Singh, chairman and managing director of the bank.

The second issue, which offered in a price band of Rs 75 and Rs 82, saw more than 95 per cent of investors applying at the upper price band.

The issue was over subscribed 9.6 times.

The qualified institutional investor portion was oversubscribed 19.5 times while the foreign institutional investor (FII) portion was over subscribed 4.2 times. "They applied for a total of 4 crore shares," Singh said.

The retail portion on the other hand was subscribed around five times.

The issue closed on April 12. The government's stake following the second issue will decline to 55 per cent from 71.2 per cent.

The bank's capital adequacy ratio (CAR) will increase to 15.5 per cent after the issue from 13.45 per cent.

The bank offered 10 crore equity shares of which one crore was reserved for employees and another one crore for its existing retail shareholders.

Of the balance eight crore, four crore was for qualified institutional buyers and 1.2 crore for non-institutional buyers. The balance, 2.8 crore was for retail investors on a proportionate basis.

The issue was made to augment the capital base of the Bank and meet its future capital requirements arising due to Basel-II implementation.

The shares would be listed at major bourses like Bombay Stock Exchange, National Stock Exchange and Calcutta Stock Exchange.

The bank, which tapped capital market for first time in 2002, has a paid up capital of Rs 346.7 crore and is slated to rise to Rs 446.7 crore after the public offer.

Allahabad bank's car might take a hit of about 2.9 per cent after adoption of Basel-II norms that prescribes higher provisioning for operational and market risks.