Karnataka Bank gains on completing Rs 600-cr QIP issue

Karnataka Bank advanced 2.82% to Rs 231.45 after the approved the allotment of a QIP issue of Rs 600 crore.

The qualified institutional placement (QIP), which commenced on 21 March 2024, concluded on 27 March 2024, with a total of 2,64,31,718 equity shares being allotted. The shares were priced at Rs 227 per share, resulting in an issue size of approximately Rs 599.99 crore.

The issue price of Rs 227 is at a discount of 1.91%, to the floor price of Rs 231.43 per equity share set for the QIP issue.

The bank said this capital raise comprising the QIP of Rs 600 crore, along with the preferential issues of Rs 800 crore in October 2023 allotment of which was approved by the committee of directors on 26 October 2023, and for Rs 100 crore in February 2024 allotment of which was approved by the committee of directors on 28 February 2024, marks the completion of the planned capital raise program of Rs 1,500 crore announced in September 2023.

The proceeds of the issues will be utilized to meet the needs of the growing business of the bank, it added.

HSBC Mutual Fund emerged as the largest allottee, securing a substantial 25% allocation. Following, SBI Life Insurance Company and Franklin India Smaller Companies Fund, both received allocations of 12.50% each. Max Life Insurance Company secured 8.33% allocation, while Morgan Stanley Asia Singapore PTE and HSBC Global Investment Funds received allocations of 7.67% and 5.50%, respectively.

Sekhar Rao, executive director of Karnataka Bank, stated, "With this successful allotment under QIP, we have enhanced our financial strength and at the same time onboarded reputed institutional investors to our CapTable. The capital raise serves the dual objective of growth and stability, aligned with our strategic objectives.

NovaaOne Capital acted as the sole advisor to the entire capital raise of Rs 1,500 crore.

Ambit and Avendus Capital acted as the book running lead managers for the QIP, said the bank.

Meanwhile, the bank informed that it has signed agreement with ICICI Lombard General Insurance Company to distribute their general insurance products to the customers of the bank.

Karnataka Bank offer a wide range of customized products and services, including loans, deposits, and international banking solutions.

The banks standalone net profit jumped to Rs 331.08 crore in Q3 FY24 as against with Rs 300.68 crore posted in Q3 FY23. Net sales stood at Rs 2,438.69 crore in Q3 FY24, registering a growth of 18.7% year on year.

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