Iibi Plans 150cr Preference Issue
The Industrial Investment Bank of India (IIBI) will shortly issue preference shares with private placements to raise funds to the tune of Rs 150 crore, and SLR bonds to the tune of Rs 100 crore within the next six months. This exercise is a step towards raising around Rs 400 crore by the year-end, to meet disbursal targets of Rs 1200 crore.
The preference shares will be of two categories around Rs 100 crore is expected to be raised through issue of preference shares redeemable after five years. Another Rs 50 crore will be raised through shares to be redeemable after one year. The issue is expected to be placed by the end of this month.
The date for floating the SLR bonds is yet to be decided by the RBI. However, IIBI sources are hopeful that the date will be fixed for the end of this year.
Meanwhile, IIBI has registered a 166 per cent increase in its sanctions in the first six months of its existence as a full-fledged financial institution to Rs 949 crore from Rs 356 crore. There was a 93 per cent increase in disbursals, to Rs 506 crore from Rs 262 crore, during the same period.
Meanwhile, the financial institution, which had floated unsecured bonds on a private placement basis in August this year, has already netted Rs 125 crore in the first month almost half of what was targeted. The coupon rate for these bonds was lower than that of any other financial institution. The bank also did not incur unnecessary expenditure towards brokerage fees as most of the funds raised came through direct subscription, the IIBI chairman G Goswami said.
The financial institution ,which is shedding its image of an institution whose sole function was to aid sick public sector units, is not accepting proposals to fund fresh rehabilitation packages. As far as existing sick cases are concerned, IIBI prefers to have a one-time settlement with them, IIBI executive director J K Ray said.
IIBI has already applied for clearance for extending a foreign currency line of credit to clients. They are scouting for foreign financial institutions and banks for a tie up in this connection.
We are concentrating on two thrust areas to increase the volume of business, and to improve our asset quality as we have inherited a large volume of non-performing assets from the erstwhile Industrial Reconstruction Bank of India, Goswami said.