Source :BL Bureau Mumbai, Dec. 8.2010
Price band at Rs 112-113; plans to raise Rs 480 cr.
Punjab and Sind Bank said on Wednesday that its initial public offering will open on December 13.
The bank is proposing to enter the market with a fresh issue of four crore shares and will raise close to Rs 480 crore through the issue.
The IPO will constitute 17.9 per cent of the post-issue share capital of the bank.
The Government's stake in the public sector bank will decrease from 100 per cent to 82 per cent after the IPO.
Discount to investors
The issue will close on December 15 for Qualified Institutional Bidders and on December 16 for other investors. The price band has been fixed at Rs 113-120 and a five per cent discount to the issue price has been given to retail investors and eligible employees of the bank.
The proceeds from the issue will be used to augment the bank's capital base to meet its future capital adequacy requirements and the growth in its assets, mainly its loan and investment portfolio.
Punjab and Sind Bank has been seeing a compounded annual growth rate of 28 per cent in credit and 36 per cent in deposits over the past five years.
Despite high growth, the bank has contained its non-performing assets through aggressive provisioning and recovery, said Mr P.K. Anand, Executive Director.
In the first half of the current fiscal, gross NPAs were 0.92 per cent and net NPAs were 0.44 per cent.
The provision coverage was at 86.83 per cent, against the mandated regulatory requirement of 70 per cent.
Net profit was Rs 276 crore. Net Interest Margin was at 3 per cent.
Focus on cash
The share of low-cost current account savings account (CASA) was at 25 per cent, which would be a focus area for the bank, going ahead, said Mr Anand.
The bank will look to moderate growth to some extent, but would continue to maintain credit growth at 1.25 per cent higher than industry growth rate.
According to Basel–II norms, the bank's Tier–I capital is 7.98 per cent and capital adequacy ratio is 13.1 per cent as on end-September.
Post the IPO, CAR would be around 14 per cent and Tier I would be approximately above 9 per cent, Mr Anand said.
Rating agency, CARE has graded the issue 4/5 indicating above average fundamentals.
The Qualified Institutional Bidders have been allotted 50 per cent of the shares, retail investors 30 per cent and High Networth Individuals 10 per cent.
SBI Capital Markets, Enam Securities and ICICI Securities are the book runners lead managers of the issue.
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