Catholic Syrian Bank plans to raise capital through preferential issue

Kerala-based private bank to allot preferential shares to 7 investors which includes Reliance Capital, Bennet, Coleman & others

Kerala-based Catholic Syrian Bank (CSB) is planning to raise money by way of preferential allotment of equity in favour of investors. They include Edelweiss Tokio Life Insurance, Reliance Capital, ICICI Pru, HDFC Standard Life, Bennet Coleman & Co, Bharati Axa and Bajaj Alliance.

While the management of the Bank was not available for comment immediately, notice to the investors stated that the Bank is planning to issue and allot upto 1,32,03,856 equity shares for cash at a price to be determined by the Board with the price band of Rs 100 to Rs 120 per share, including premium. The total consideration would be around Rs 132 crore to Rs 158 crore.

It may be noted, CSB management earlier said that it was planning to raise around Rs 500 crore from investors, including Prem Watsa-led Fairfax Financial Holdings. The Bank, which dropped its IPO plan, said that the existing investors would continue and it would dilute fresh equity for the proposed fund raising.

The Bank said it need to augment its capital base substantially in order to support its growth plan requirements and to comply with the regulatory requirements on capital adequacy. Bank's CAR under Basel-II during the end of March 2016 was 10.59% as compared to 11.05% and under Basel-III it was 10.55% as compared to 11%, a year ago.

CSB has been exploring various avenues to raise capital, according the Board of Directors proposed to offer, issue and allot equity shares to investors on a preferential basis.

Investors includes Edelweiss Tokio Life Insurance Company (2.94 % of post preferential offer holding), 4.98% each to Reliance Capital Ltd, ICICI Prudential Life Insurance Company Ltd, HDFC Standard Life Insurance Company Ltd and Bharati Axa Life Insurance Company Ltd.

Bennett, Coleman & Co. Ltd, India's leading media conglomerate, (1.77 %) and Bajaj Allianz General Insurance Company Ltd (0.88 %).

The number of shares and percentages are only indicative and it may change depending on the receipt of application and final allotment of shares by the Board, said the Bank in a circular. The Bank also said that none of the allottees of shares will be exceeding the ceiling limit on the per centage of holding of shares/ voting rights in the Bank, as prescribed in the Bank Regulation Act.

It may be noted, during the year the Bank has allotted 11,370,357 shares at Rs 100 each to investors including Vinod Mohan Nair, Bridge India Fund, Agnus Capital LLP, ICICI Lombard, Far East Franchise Pte Ltd, NRI and businessman Yusuf Ali M A. T Varghese George, Global 9 Resources Pte ltd, Brightness Capital and Advisory Services and Sat Pal Khattar.

CSB is one of India's oldest private sector banks with headquarters in the Thrissur district of Kerala. For over nine decades, the Bank remained a neighbourhood bank for its growing fraternity of customers. The company has a strong base in Kerala, along with significant presence in Tamil Nadu, Karnataka and Maharashtra.

The key focus areas of the Bank were small and medium enterprises (SME), retail clients and NRI customers. The Bank has a strong deposit book, as most of its NRI customers and expatriates working in the Gulf remit their money back home to India.

Bank has reported a loss of Rs 149.72 crore in FY16 as compared to loss of Rs 53.17 crore. The total income of the Bank was Rs 1,587.56 crore as compared to Rs 1,671.90 crore.

As on March 31, 2015 there are about 21 shareholders who are having more than 1% stake in the Bank. The top investors include non-resident indian (NRI) businessman Yusuff Ali M A with 4.985% stake, who is the managing director of Abu Dhabi-based Emke Group that operates LuLu hypermarkets and supermarkets in West Asia, followed by Kerala-based The Federal Bank Ltd with 4.617% stake.

The other investors include GPE III Mauritius Direct Investment, AIF Capital Development, SIguler Guff BRIC Mauritius, Agnus Capital LLP, Edelweiss Finance and Investments and others.

The HNI investors in the Bank include Gopinathan C K, Anitha P V, Lal Arakulath Sankappa, Thomas John Muthoot among others.