Bank of Rajasthan in talks to sell 14.75%

Bank of Rajasthan (BoR) plans to divest a 14.75 per cent stake in the bank through a preferential allotment of equity shares to foreign institutional investors (FIIs) or strategic partners.

The move follows the need to adhere to the Reserve Bank of India's draft guidelines on reducing promoter holding in a bank to 10 per cent. The guidelines, released in July, stated that no single entity should hold more than 10 per cent stake in a private sector bank.

According to sources close to the development, Metlong Investment, Development USA Ltd, Citigroup and Societe Generale are in the race to acquire the stake.

Pravin Kumar Tayal, chairman, Bank of Rajasthan, said the bank has given presentation to several investors/funds and Societe Generale is one of them.

As on date, the Bank has not signed any memorandum of understanding with any of the funds. The funds are in process of doing their due diligence and after which they may come forward for a pact, he added.

The allotment will be completed before January and the bank is looking at a price of Rs 85 to 95 a share, Tayal said.

Post allotment, promoter holding in the bank will fall to 38 per cent from 46 per cent, he added. The bank's paid-up capital post allotment will increase to Rs 123 crore from Rs 107 crore, said Tayal.

On the Bombay stock exchange (BSE) today, the stock ended the day at Rs 68.40, up 20 per cent against its previous close of Rs 57.

In 2003-04, the bank earned an interest income of Rs 502.85 crore compared with Rs 472.66 crore for the year ending March 31st, 2003.

The operating profit amounted to Rs185.30 crore as against Rs148.58 crore. The bank earned a net profit of Rs 69.03 crore.

Total deposits during the year went up by 39.75 per cent to Rs7,406 crore.