Canara Bank to raise Rs 1,520 cr from LIC

Bank making preferential allotment of 40 million equity shares to insurance major

Bengaluru-based public sector lender Canara Bank is looking at raising Rs 1,520 crore from Life Insurance Corporation of India (LIC) by making a preferential allotment of 40 million equity shares.

The Bank’s board of directors has already approved the issue and the Bank is holding an extraordinary general meeting on April 30, 2015 to obtain shareholders’ consent, the Bank said in a filing to BSE.

The Bank has fixed March 31, 2015 as relevant date in terms of SEBI-ICDR Regulations. The Bank has fixed a minimum issue price of Rs 380.08 per equity share. Post this issue, the Bank’s Tier-I capital will get strengthened. The capital adequacy ratio under Basel-III currently stands at 9.87%.

Currently, LIC of India holds 7.29% equity in the Bank, which will go up to 14.49% after the preferential allotment. The government of India, which is the main promoter will see its shareholding come down to 64.48% post preferential allotment to LIC from the present level of 69.91%.

The LIC board has already given its consent to subscribe to the preferential issue.  The Bank intends to utilise the issue proceeds to improve the capital adequacy and to fund the general business needs of the Bank. Canara Bank’s stock was traded at Rs 378.55 per share, showing a dip of 0.32% during the intra-day trading on BSE.