IDBI looking at FPO to shore up capital base

The govt holds 76.5% equity in the bank, a tad over market regulator Sebi's minimum public holding norm of 75%

Public sector lender IDBI Bank today said it is awaiting correct valuation before coming out with a follow-on public offer, which will help it shore up its capital base.

"Once we get the right valuation in the market, we will be looking for a follow-on-public offer (FPO)," IDBI Bank Chairman and Managing Director MS Raghvan told reporters here today, without specifying the amount he is looking at raising.

The government holds 76.5% equity in the bank, a tad over market regulator Sebi's minimum public holding norm of 75%.

"We are quoting at 70% of the book value. When we get around 100% to the book value we will go to the market," he said.

It can be noted that IDBI did not get any capital from the government when it had scaled down the overall capital infusion plan of Rs 6,900-crore last fiscal into nine state-run banks. SBI, PNB, Canara Bank and six other banks got the money.

On base rate cut, which his larger peers have already done, Raghvan said the bank's Alco is going to meet next week and a decision will be taken after that.

"We are just re-calculating...Because of the RBI's new benchmarks on arriving at cost of funds. We have to work out and see which one-- marginal cost or average cost-- is near reality. By the end of this month you can expect something," he said.

Many of the large banks like State Bank of India, ICICI Bank, HDFC Bank and Axis Bank and mortgage leader HDFC cut their base rates and lending rates earlier this month.

The IDBI counter was trading up over 4.2% at Rs 83.40 at 1330 hrs on the BSE, whose main gauge was trading nearly flat with a negative bias. However, the bank's scrip is way below its one-year high of Rs 116.40, which is over 28% down.