Idbi Bank Meet Over Rights Float On May 19

The IDBI Bank board will meet on May 19 to decide on the modalities of raising capital though a rights issue. The bank is likely to raise over Rs 100 crore through this issue.

The board will meet to decide on the pricing of the rights issue, the size of the issue and also to decide on a merchant banker.

The board of the bank had earlier met on May 9 to discuss the issue of capital raising. However the board was not able to arrive at a decision and the board was to meet in June again to decide on the issue.

 

The rights issue will have to be priced attractively so that investors especially the retail investors will subscribe to the issue.

The Industrial Development Bank of India (IDBI) has a stake of 57.11 per cent in IDBI Bank while the Small Industries Development Bank of India has a 14.28 per cent stake in the bank.

The other investors in the bank include LIC which has a 2.89 per cent while IFCI has a 1.19 per cent. The public shareholding in the bank is at 15.45 per cent.

Both IDBI and SIDBI are likely to subscribe to the issue. However in case if the retail shareholders do not subscribe to the issue, one of the insurance companies may pick up the unsubscribed portion.

For a rights issue to sale through 90 per cent of the investors need to subscibe to the issue. IDBI and SIDBI cannot subcribe to the unsubcribed portion as this will increase its stake in the bank. The promoter shareholding in private sector banks have been pegged at 49 per cent.

Last year, IDBI had looked at offering a stake in the bank through a preferential issue to public sector insurance companies like LIC and GIC.

The bank