Bank of Rajasthan will issue 1 crore equity shares on preferential basis to Indus Capital Partners LLC (6.5 million shares) and Max India (3.5 million shares), a Delhi-based fund at a minimum of Rs 150 per share. A decision to this effect was taken by the board of directors of the bank, at its meeting held in Hyderabad today."The two funds have already issued offer letters to the bank at a price of Rs 150 per share. The price will be calculated as per the Sebi guidelines for preferential issue and will get the price which ever is higher," said Sanjay Kumar Tayal, director (promoter) of Bank of Rajasthan. The fresh issue of preferential shares works out at close to 4% of the bank's equity, he said.This is the first tranche of the preferential issue proposed by the bank, while the next tranche of the same size of equity shares is expected to be issued some time next year at a higher price, according to Tayal. The bank will call for an extraordinary general meeting in a couple of months to get its approval for the same."Though we are not in immediate requirement of funds, the resources raised through the issue of preferential shares will certainly strengthen the bank and its bottom line," Tayal told Business Standard.Close to 44% of the equity capital of Rs 135 crore is currently held by the promoters, while around 10% equity is held by foreign institutional investors, leaving the rest spread across the remaining spectrum of public.The bank reported a 30% increase in net profit at Rs 24 crore for the quarter ended September 2007, compared with Rs 19 crore, excluding the one-time profit of Rs 37 crore on sale of equity shares of Bharat Overseas Bank, in the corresponding quarter last year. The yield on advances increased to 11% during the quarter under review, from 9% in the corresponding previous quarter.However, on sequential terms, the net profit for the second quarter was down by 20%, compared with Rs 30.17 crore in the first quarter of the current financial year. Net profit for the year 2006-07 stood at Rs 110.57 crore, compared with Rs 15.25 crore in the previous financial year.
