Iibi Convenes Agm To Set Preference Float Terms

The Industrial Investment Bank of India convened an extraordinary general meeting (EGM) to finalise the terms of its Rs 120 crore preference share issue in Calcutta on Monday.

The issue is for subscription to 1,20,00,000 redeemable cumulative non-convertible preference shares Series A and B of Rs 100 each of the institution, for cash at par.

The financial institution has a greenshoe option of up to Rs 50 crore.

The issue will open in the third week of this month. For both categories, the minimum application size is 50,000 shares.

The two instruments made available to tax paying corporates, non banking finance companies and public sector units are:

Series A : Redeemable cumulative non-convertible preference shares redeemable on the expiry of one year from the deemed date of allotment carrying dividend at the rate of 7.5 per cent per annum.

Series B : Redeemable non-convertible preference shares redeemable on the expiry of 61 months from the deemed date of allotment carrying a dividend rate of 9.6 per cent.

The pre tax yield to the investor at a 35 per cent corporate tax rate for Series A is 11.54 per cent and Series B is 14.77 per cent.

The issue has a zero risk weightage for capital adequacy purposes for commercial banks and non-banking finance companies.

According to the chairman-cum-managing director G Goswami: the Series A preference shares are targeted towards high tax paying corporates and public sector units having temporary surplus funds. The zero risk weightage for capital adequacy purposes will prove to be extremely attractive for banks and NBFCs.

The IIBI will declare a dividend at the nominal face value of the preference shares every year at the respective specified rates till redemption subject to availability of divisible profits.

Investors who can invest in this issue include companies and bodies corporate, banks, NBFCs, financial institutions, mutual funds, registered societies and association of persons, insurance companies, individuals/HUFs, any other investor permitted to invest in the preference shares of an Indian body corporate.

During the half year ending September 30, 1997 financial results for IIBI indicate sanctions at Rs 948.92 crore was 166 per cent higher compared to Rs 356.06 crore achieved during the corresponding period of the previous year.

Disbursements during the period at Rs 505.46 crore showed a growth of more than 92 per cent over Rs 262.24 crore achieved during the year 1996-97.