The board of Punjab & Sind Bank (PSB) on Wednesday approved a proposal to rework its initial public offer (IPO) plan in line with the recently-introduced government rules on a minimum 25 per cent public shareholding.
This would allow the bank to raise about Rs 500-600 crore. Earlier it was planning to raise Rs 400-500 crore with an equity dilution of 18 per cent.
“The issue will hit the markets in late July. We will follow the normal procedure of taking necessary approvals. It should not take much time as in-principle approval is already there,” its chairman & managing director GS Vedi confirmed to Business Standard. He said the bank would utilise the additional funds for its expansion plans and credit disbursement.
PSB is the first entity to modify its public offer plans after the new rules were introduced last week. It had already taken approval from the Reserve Bank of India (RBI) and the finance ministry to launch the issue by the end of this month or early July. The Delhi-based bank will now seek fresh approvals and approach the Securities and Exchange Board of India with a draft prospectus.
At present, the government owns 100 per cent stake in PSB. As per the new plan, the only unlisted public sector bank will issue about 62.5 million shares. For 18 per cent stake dilution it was planning to issue 40 million shares with a face value of Rs 10 each. It has already appointed three merchant bankers, including SBI Caps, ICICI Securities and Enam Securities for the proposed public offer.
The bank is also expecting a capital infusion of Rs 700 crore from the Centre this year to shore up its Tier I capital above 8 per cent. This is expected to meet its requirements till 2015.
The government had restructured the equity structure of the bank in 2008. After the capital rejig, its equity capital came down to Rs 183.06 crore from Rs 743.06 crore.
PSB is also planning to reach one lakh crore in business by March 2011. In 2009-10, the bank posted an 18 per cent jump in net profit at Rs 508.8 crore, compared to Rs 431.1 crore in the previous year. Total income rose by 19 per cent at Rs 4,345.9 crore, while the net interest income grew by 17 per cent at Rs 1,183.9 crore. Business rose by 37.9 per cent at Rs 81,894 crore at the end of 2009-10.
