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Sunday, December 29, 2013

PSU banks raise over Rs 15,000 cr through QIPs

State-run lenders including SBI and IDBI Bank have lined up more than Rs 15,000 crore worth of share-sales to institutional investors to shore-up their capital base.

Apart from State Bank of India and IDBI Bank, Indian Overseas Bank, Dena Bank and Allahabad Bank has also evinced interest in raising funds through qualified institutional placement (QIP). Some more public sector banks are in the process of taking approvals from their boards for QIPs.

These banks are collectively planning to rake in over Rs 15,000 crore through the proposed share-sale to institutional investors. Many of these lenders are expected to raise funds next year.

This alternate resource mobilisation is over and above Rs 14,000 crore capital infusion to be made by the government for the public sector banks during this fiscal.

The funds will be used to boost the capital base of the banks to maintain future growth and Capital Adequacy Ratio (CAR) under new global risk norms.

The country’s largest lender, SBI, which is planning to mop-up Rs 9,576 crore through a QIP in January-March quarter, has already received government approval for it.

Besides, IDBI Bank plans to raise Rs 1,200 crore via sale of shares to institutional investors, Dena Bank - Rs 800 crore, IOB - Rs 350 crore and Allahabad Bank - Rs 320 crore.

Last week, private player Dhanlaxmi Bank had allotted 1.75 crore equity shares at Rs 38.25 a piece, aggregating Rs 67.22 crore to qualified institutional buyers through qualified institutional placement.

QIP is a capital raising tool whereby a listed firm can issue equity shares, fully and partly convertible debentures, or other securities that are convertible to equity shares to institutional investors.

Overall, Indian companies raised over Rs 12,000 crore in 2013 through QIP issuance, as against nearly Rs 10,000 crore garnered in the preceding year. However, the number of issuance declined to 21 in 2013 from 47 last year.

Market experts said attributed the growth in fund raising via QIPs to volatile market conditions and it was easier to raise funds from institutional investors.

Source: Thehindubusinessline


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