P&SB to rework IPO plan after new directive

Punjab & Sind Bank (P&SB) is likely to be the first entity to rework its initial public offer plan, following the government mandate of a minimum 25 per cent public float for all companies.

The public sector bank’s board is due to meet tomorrow to discuss the revised plan. P&SB is the only unlisted public sector lender.

The bank had proposed to issue 40 million shares through its public offer and to mop up Rs 400-500 crore from the process. The issue was expected to hit the markets in about four weeks, but now it will get delayed.

If the board approves the revised plan, the bank will have to seek fresh approvals from the government and the Reserve Bank of India, and then approach the Securities and Exchange Board of India with a draft prospectus.

P&SB has already appointed SBI Caps, ICICI Securities and Enam Securities as lead managers for its issue.

The money raised through the float would help the bank grow the business and asset book. It is expecting fresh capital infusion, of up to Rs 700 crore, from the government. This will be in addition to the equity restructuring undertaken two years ago, which had seen the paid-up capital base shrink to Rs 183.06 crore from Rs 743.06 crore.

At the end of March, the bank’s Tier-I capital adequacy ratio was estimated at 7.68 per cent. Last year, the bank posted an 18 per cent jump in net profit, to Rs 508.8 crore, while its income rose by 19 per cent to Rs 4,345.9 crore. The bank’s total business went up by nearly 38 per cent to Rs 81,894 crore at the end of March 2010.