Punjab & Sind Bank files draft prospectus with Sebi

Punjab & Sind Bank, the only unlisted state-owned lender, today said it has filed draft papers with market regulator Sebi for its initial public offer (IPO) through which it plans to raise about Rs 600 crore.

"We have filed a Draft Red Herring Prospectus or IPO and expects to raise something in between Rs 500-600 crore," Punjab & Sind Bank Executive Director P K Anand told PTI.

The bank proposes to issue up to 4 crore equity shares of Rs 10 each for cash at price to be discovered through a 100 per cent book building process.

The IPO is expected to hit the market by the end of November or early December depending on regulatory clearances, he said, adding the proceeds would be utilised for credit expansion.

The government would offload about 17.9 per cent of its stake through IPO and post offer its holding would come down to about 82 per cent, he said.

Currently, the government owns 100 per cent stake in the bank and is the only unlisted bank among 19 nationalised banks in the country.

The bank has appointed SBI Capital, ICICI Securities and Enam Securities as merchant bankers for its proposed IPO.

Besides, the bank has also requested the government for Rs 700 crore capital support to shore up its tier I capital above 8 per cent from 7.68 per cent at the end of March 2010.

In a bid facilitate IPO process, the government had restructured the equity structure of the bank in 2008. After the capital rejig, its equity capital came down to Rs 183.06 crore from Rs 743.06 crore.

In fiscal 2010, the bank posted an 18 per cent jump in net profit at Rs 508.8 crore compared to Rs 431.1 crore the previous year. The bank plans to increase its branch network from 918 to 1,000 by the end of March 2011

The bank had earlier got approval from the government to offload 18 per cent stake but later revised the stake dilution to 25 per cent. This was done following the government's decision that all the listed companies should increase their public holding to a minimum of 25 per cent in a phased manner.

However, the government provided exemptions to few public sector entities, including Punjab & Sind Bank, from meeting this criteria.