Punjab & Sind Bank, one of the two unlisted public sector banks in the country, is aiming to dilute government holding by 20-25 per cent through initial public offer in the first half of the next fiscal.
“We will start preparation for public issue during the current fiscal. As soon as we are ready with the March 2010 numbers we will file draft prospectus with SEBI,” Chairman and Managing Director of Punjab & Sind Bank G S Vedi said.
“We will time the issue in such a fashion that we are there before September 2010. Our intention is that we are through with IPO between April and September next year,” he said.
The bank would seek approvals from the bank’s board and the Finance Ministry as well as Reserve Bank’s clearance.
On stake dilution, Vedi said it could be in the range of 20-25 per cent through the public offer.
With the IPO, the bank will get Tier I capital and this is long-term capital to support future growth, he said.
To increase attractiveness of the shares, the government last year restructured equity structure of the bank.
Restructuring was intended to enable the bank to go for initial public offer at a reasonable premium and raise capital for growth.
As per the restructuring, Rs 160 crore were converted into ‘Innovative Perpetual Debt Instrument’ and Rs 400 crore into ‘Perpetual Non-Cumulative Preference Shares’ and Perpetual Cumulative Preference Shares.
After the capital rejig, equity capital of the bank came down to Rs 183.06 crore against Rs 743.06 crore earlier.
Asked about financial assistance it has sought from the government, Vedi said the bank has requested the government for the capital infusion of Rs 700 crore during the fiscal.
The fund infusion help the bank in maintaining capital adequacy ratio to over 12 per cent and enhance the lending capacity of banks towards the productive sector, he said.
The capital adequacy ratio of the bank stood at 11.88 per cent at the end of March, 2009.
Punjab and Sind Bank with a business of over 69,000 crore recorded a Rs 438 crore profit during the financial year 2008-09.
During the first quarter ended June 2009, the net profit of the bank increased to Rs 125.47 crore against Rs 82.59 crore in the same quarter a year ago.
Total income at the same time rose to Rs 10,009 crore compared to Rs 796.06 crore in first quarter of 2008-09.
Capital Adequacy Ratio of the bank at the end of June 2009 stood at 12.36 per cent.