Bank of Punjab to dilute 18.7% equity

Bharti, Nova Scotia, ICB Financial to pick up 4.99% each.

Bank of Punjab (BoP) today announced the placement of 18.78 per cent of its equity through a preferential allotment to five investors.

The team of investors is led by Bank of Nova Scotia, Canada, ICB Financial Group Holdings, Switzerland, and Bharati Enterprises. The bank will place 4.99 per cent of its equity with each.

Besides, the private bank will also allot a 3 per cent stake to BN Enterprises, an export house, and another 0.81 per cent stake to VN Koura, a notice sent to the Bombay Stock Exchange (BSE) said. Bank of Nova Scotia will have board representation.

The bank will issue 24,285,176 equity shares at Rs 38 per share.

"Bank of Punjab will raise around Rs 92.28 crore from the deal, which should support the bank's growth for the next one year," said CR Sharma, managing director, Bank of Punjab. He added the bank would not sell more equity now or merge with another bank.

A Bharti executive said the move was just another financial investment by Bharti Enterprises, as in TV Today, and had nothing to do with Bharti Tele-Ventures.

On the BSE today the Bank of Punjab scrip ended up 14.14 per cent to Rs 44.40 against its previous close of Rs 38.90. In early trade, a block deal of 600,000 shares of Bank of Punjab was done. The trade volume of the Bank of Punjab scrip today touched 15.2 million, up from 1.5 million yesterday.

After the preferential allotment, the promoters' holding in Bank of Punjab will come down to 24 per cent from 31.7 per cent, Sharma said. The bank has called for an extraordinary general meeting on March 23 to seek shareholder approval for the preferential allotment.

The Canadian bank, which has a major presence in the bullion trade, operates through three branches in India. This means if Bank of Nova Scotia is allowed to increase its stake in Bank of Punjab and eventually take it over, it will have to return its branch licence to the Reserve Bank of India.

Bank of Muscat, which has taken a 33 per cent stake in Centurion Bank, has followed this route.

Bank of Punjab's retail portfolio is growing by around 30 per cent year-on-year. Its fee-based income, too, has been growing by over 30 per cent.

The bank's capital adequacy ratio currently stands at 11.8 per cent. Its net profit for the quarter ended December 31, 2004 stood at Rs 0.94 crore, down 92 per cent from Rs 12.05 crore in the corresponding quarter of the previous financial year.

The bank's paid-up capital and reserves on December 31, 2004 stood at Rs 105 crore and Rs 138 crore, respectively.

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Lower stakes

Bank of Punjab bank will issue 24,285,176 equity shares at Rs 38 per share

The bank will raise around Rs 92.28 crore from the deal

After the preferential allotment, the promoters' holding will come down to 24% from 31.7%