CUB to raise up to Rs 300 cr via QIP

City Union Bank Ltd is planning to seek the approval of its Board of Directors for a proposal to raise around Rs 250-300 crore by way of Qualified Institutional Placement (QIP). The bank said it would put the proposal in front of the board on June 29, 2010.

S Balasubramanian, managing director and chief executive officer, City Union Bank (CUB), told Business Standard that the bank had received the board’s approval to raise the money a year ago. But the bank had not used the approval, which as per the regulation, was valid for one year.

“We are now going back to board for the approval,” he said. The board will also consider the issue of equity shares subject to the applicable laws and regulations including RBI & SEBI Guidelines.

The QIP is likely to be done in the month of October, subject to market conditions, and but the bank is not planning to dilute more than five per cent, according to Balasubramanian. The bank’s share price at the Bombay Stock Exchange was trading at Rs 35 per share on Thursday.

The Kumbakonam-based bank had set a total business target of Rs 22,000 crore for the current financial year. "To support this target, we have to raise money from both domestic and foreign institutions by way of QIP."

In the last three years the bank had raised Rs 200 crore through rights issue and through preferential allotments. The bank closed the year 2009-10 with a net profit of Rs 152.76 crore an increase of 25.08 per cent compared to Rs 122.13 crore.

“We are posting profit continuously for the last 100 years,” he noted. For the year 2010-11, the bank had set a target of Rs 210 crore net profit.