Punjab & Sind Bank to launch IPO in first half of Dec

Punjab & Sind Bank, the only unlisted state-owned lender in the country, today said its initial public offer (IPO) is likely to hit the capital market in the first half of December.

"We are looking at the first half of December for the IPO," Punjab & Sind Bank Executive Director P K Anand said.

Market regulator Securities and Exchange Board of India (Sebi) has already approved the draft prospectus filed by the bank for the IPO.

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

This would dilute the government's holding in the company by 17.9 per cent and post-offer, its holding would come down to about 82 per cent.

At present, the government owns a 100 per cent stake in the bank, which is the sole unlisted bank out of the 19 nationalised lenders in the country.

Asked whether there would be an anchor investor for the public offer, Anand said the bank would take a decision in this regard shortly.

In addition to deliberating over whether to rope in anchor investors, the board of the bank will also decide if a discount is to be offered to retail investors at a forthcoming meeting to be held shortly.

Anand said the proceeds from the IPO would be utilised for business expansion, adding that the funds raised would take care of the bank's credit growth requirement over the next two to three years.

The funds would also enhance the capital adequacy ratio of the bank from 13.1 per cent to over 14 per cent, he added.

The book value of the bank stood at Rs 119.5 at the end of September, 2010, he said.

As part of capital raising plans, the bank has also requested the government for the capital infusion of Rs 700 crore.

"We have made a request for capital infusion and are awaiting government decision on this," he said.

For the half year ended September, 2010, the bank posted an 11 per cent jump in net profit to Rs 261 crore from Rs 235 crore in the same period last year.

Total business rose by 33 per cent to Rs 88,841 crore from Rs 66,614 crore at the end of September, 2009.

In order to enhance employee participation in the IPO, Punjab & Sind Bank has opened demat accounts for every member of its 8,000-strong workforce.

The bank proposes to reserve 20 lakh shares for subscription by eligible employees.