Punjab & Sind Bank's Rs 480 cr IPO on Dec 13

The New Delhi-based Punjab & Sind Bank (PSB), the last of the unlisted state-run lenders, today said its Rs 480-crore initial public offering (IPO) will be open from December 13 to 16.

Through the issue, priced at Rs 113-120 for a share of Rs 10 face value, the century-old lender will issue fresh equity worth 17.93 per cent, or 4 crore equity shares. The net issue, however, will only be 17.04 per cent.

Both the bank management as well as their merchant bankers are hopeful that the issue will get a rousing welcome from the markets, even though the banking stocks have been battered badly since Reserve Bank Governor Duvvuri Subbarao's last week call to bring down net interest margins by paying more to depositors and lending at cheaper rates.

At the lower end of the price-band, the issue will fetch Rs 452 crore to the bank, while on the upper end, it will mop up Rs 480 crore.

"Post the issue, which will open on December 13, the government holding in the bank will come down to a tad over 82 per cent. Of the entire 4 crore shares on offer, 3.8 crore will be open to public, as the rest is reserved for its employees," PSB Executive Director PK Anand said, announcing the IPO plans here today.

The issue will close on December 15 for the qualified institutional buyers and on the 16 for all other bidders.

Of the net issue of 3.8 crore, up to 50 per cent is reserved for qualified institutional investors, of which 5 per cent is meant for mutual funds. Employees and retail investors will get a 5-per cent discount on the issue price, Anand said, adding the issue has an IPO grade 4 rating from Care.

"Since this is not a divestment of its holding by the government, the entire IPO proceeds will go to the bank," Anand said, who is  also the officiating head of the bank. The bank has been headless since June when the then incumbent retired.

The issue is being lead-managed by SBI Caps, Enam Securities and ICICI Securities.

Founded way back in 1908 in Amritsar, the bank, nationalised in April 1980 under the second wave of bank nationalisation by the then Indira Gandhi Government, has one of the highest growth rates in the industry.

The bank has been recording a CAGR of 36 per cent in business since the past five years, Chief General Manager H S Makker said.

As of the September quarter, PSB had a net profit of Rs 276 crore, which stood at Rs 501 crore for FY10, while its total business touched Rs 88,000 crore by the end of the first half of this fiscal.

On the branch and ATM expansion plans, Makker said the bank will be opening 100 more branches and a similar number of ATMs this fiscal.