Punjab & Sind Bank plans IPO to beef up capital

Looking to raise Rs 480 crore through its initial public offer,state-run Punjab and Sind bank will offer over four crore equity shares.

The floor price for the shares is Rs 113 and the ceiling has been capped at Rs 120. The issue will open for subscription on December 13 and close on December 15 for qualified institutional borrowers and the next day for retail investors and other non-qualified institutional borrowers.

When asked if the offer would be impacted by the current volatility in the stock markets,PK Anand,Executive Director,Punjab and Sind Bank, said,Market volatility is already factored in the pricing of the issue.

Addressing a press conference,he said,The bank plans to open 100 branches this fiscal out of which only 10 have been opened till now. By March 2011,90 more branches in Tier II to Tier VI cities will be opened. Almost 30 per cent of the total 926 branches of the bank are covered by core banking solution.

The bank’s current capital adequacy ratio ( BASEL II) stood at 13.04 per cent at the end of the quarter ended September 2010 as against the RBI mandated 9 per cent and the government stipulation of 12 per cent.

Punjab and Sind Bank said that the object of the IPO is to expand its capital base to meet the future capital requirements arising out of the growth in its assets due to economic growth and for other general corporate purpose.

ICICI Securities,Enam Securities and SBI Capital are the book running lead managers of the issue. Around 20 lakh shares have been reserved for subscription by eligible employees. The issue shall constitute 17.93 per cent of the post issue share capital of the bank. The net issue shall constitute 17.04 per cent of the post-issue share capital of the bank.

Story continues below this ad

According to the risk factors mentioned by the company,its priority sector lending constitutes 31.57 per cent of the adjusted net bank credit. The bank has significant exposure to the real estate sector with the housing finance loan constituting 47.16 per cent of the total loans outstanding in the bank’s retail business segment.