Punjab National Bank planning QIP to raise $250-300 million

Mumbai: State-owned Punjab National Bank (PNB) plans to raise equity capital through a qualified institutional placement (QIP) that could see the lender raise as much as $250-300 million, said two people aware of the development.

PNB is among the several state-owned banks that have planned to tap the capital markets to raise funds in order to recapitalize balance sheets laden with bad loans.

“PNB has called merchant bankers to pitch for mandates for the QIP this week. They are likely to look at raising anywhere between $250-300 million through their planned QIP. The bank will decide on the final size of the fundraise and the launch timeline after selecting the panel of bankers,” said one of the two people cited above, requesting anonymity as he is not authorized to talk to reporters.

PNB has taken approval from its shareholders to raise as much as Rs3,000 crore through an equity issuance, either through a QIP or a follow-on public offering (FPO).

Calls and text messages to PNB managing director and chief executive officer Sunil Mehta did not elicit any response.

Apart from the QIP, the state-owned lender has planned to raise funds from various other avenues too.

The lender is looking to sell as much as 10% in its housing finance unit and list its life insurance subsidiary, Mehta said in an interview on 25 August.

Mehta said. PNB holds 38.8% in PNB Housing Finance. PNB plans to raise at least Rs1,000 crore by selling some of its stake in PNB Housing Finance Ltd before the end of the fiscal year,

PNB’s capital adequacy ratio at the end of June quarter was 11.64%, above the Basel III requirement of 11.5% by March 2019. CAR is an indicator of a bank’s financial strength and is expressed as a ratio of capital to risk-weighted assets.

PNB is among 12 public sector banks that have lined up plans for raising funds from the capital markets to shore up their capital base to meet Basel III norms, PTI reported on 6 August.

Allahabad Bank has already obtained shareholders’ approval to raise equity capital aggregating up to Rs2,000 crore, while PNB’s board has approved raising as much as Rs3,000 crore.

On 25 September, Mint reported that Bank of India was looking to raise Rs500 crore through a QIP.

This year, QIP fund-raising activity has been dominated by large issuances in the banking and financial services sector.

Till September this year, 20 companies had raised Rs39,681.67 crore through QIPs, according to data from primary market tracker Prime Database.

On Monday, shares of Punjab National Bank closed at Rs133.75, down by 0.96% on the BSE, while the benchmark Sensex closed at 32,633.64 points, up by 0.62%.