IDBI Bank seeks approval to raise Rs 1,500 cr from LIC

Equity shares, to be offered on preferential basis, at Rs 53.44

Public sector lender IDBI Bank has priced its equity shares to be issued to Life Insurance Corporation of India (LIC) at Rs 53.44 a share. The size of the equity on offer is Rs 1,500 crore. The Mumbai-based lender plans to issue 280.6 million shares of Rs 10 each at a premium of Rs 43.44 a share to LIC on a preferential basis.

The price has been fixed according to the Securities and Exchange Board of India’s formula. It would seek shareholders’ nod for the offering at a meeting scheduled in March, according to a communication to the BSE. IDBI Bank’s shares closed flat at Rs 56.20 on the BSE.

The bank is raising money through fresh issue of equity shares to meet capital requirements for business growth. It would also help to maintain capital adequacy ratio, especially after making provision for non-performing assets and stressed loans. Its capital adequacy ratio was 13 per cent with Tier-I capital of 8.71 per cent, at end of December 2015.

After the offering, LIC would hold 19.18 per cent stake in IDBI Bank, up from 7.24 per cent. The Indian government’s shareholding would decline to 69.84 per cent from 80.16 per cent.

IDBI Bank said it had done road shows for its qualified institutional placement (QIP) offering for equity shares worth Rs 3,771 crore. While there was good investor interest for the QIP, it decided to differ the offering due to adverse market conditions.  The government, the lender’s majority shareholder, had already infused Rs 2,229 crore in the bank in 2015.  The lender had reported a loss of Rs 2,183 crore in the third quarter ended December 2015 on huge provisions for bad loans. It had posted net profit of Rs 327 crore in October-December 2014.