Bank of Maharashtra (Mahabank)has decided to defer its plan for an initial public offer (IPO) by a year. The decision to defer the IPO was taken at its board meeting held in New Delhi on August 3.
The bank's original plan to tap the capital market with a Rs 170 crore par offering this financial year had run into rough weather due to opposition from eight independent directors.
At the board meeting it was agreed that it will be in the interest of the bank to strengthen the balance sheet further and tap the market with a premium offering in the next financial year after the capital market conditions improve.
The bank has written a letter to the union finance ministry citing the reasons for deferring the IPO. The whole board comprising 12 directors went along with the decision.
In order the maintain the capital adequacy ratio at the March-end 2002 level of 11.16 per cent for the projected 18.56 per cent growth in risk-weighted assets, Mahabank could make do with a small Rs 75 crore Tier-II issue, said sources in the know of developments.
The bank expects to grow its risk-weighted assets by Rs 1,673 crore to Rs 10,686 crore in 2002-03.
With Union Bank of India set to tap the capital market from August 19 and Canara Bank slated to hit the market with its IPO either in September or October, the directors felt that Mahabank's issue could get crowded out.
SBI Capital Markets Ltd, however, had, in a presentation on July 17 to the Mahabank's board of directors recommended that the public issue should be launched after Union Bank's public issue. Further, the bank is now also examining the possibility of returning capital to the government in the run-up to its IPO next year.
