PNB, Indian Bank, Syndicate Bank likely to launch QIPs this month

Mumbai: At least three state-run lenders—Punjab National Bank (PNB), Syndicate Bank and Indian Bank—are likely to launch their qualified institutional placement (QIP) offerings in the coming weeks, said three people aware of the development. Collectively, these three state-owned lenders are targeting to raise around Rs6,000-7,000 crore.

QIP is a capital-raising tool through which listed companies can sell shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer. Of the three, PNB is likely to be the first to launch its QIP, as early as this week, said one of the three people cited above, requesting anonymity as he is not authorized to speak to reporters.

“PNB is looking to raise up to Rs5,000 crore through its QIP. They have completed their investor road shows and are ready to launch the offering as early as this week,” he said.

Syndicate Bank and Indian Bank, too, have been meeting investors and are looking at launching QIPs soon, said the second person cited above, also requesting anonymity.

“The two banks are looking to raise up to Rs1,000 crore. They could raise more if there is more investor interest,” he said. Another state-run lender Andhra Bank has been holding investor road shows and is looking to raise funds through a QIP, said the third person cited above.

Emails and text messages sent to the management of PNB, Indian Bank and Syndicate Bank and Andhra Bank on Friday were not answered.

A buoyant secondary market, flush with domestic liquidity and the recently announced bank recapitalization plan announced by the central government have resulted in a rush of PSU bank QIPs. Already this month, two state-owned lenders Bank of Maharashtra and Union Bank of India have launched their QIPs. While Bank of Maharashtra raised Rs313.5 crore, Union Bank is looking to raise at least Rs1,000 crore with a green-shoe option of another Rs1,000 crore. In October, Dena Bank raised Rs400 crore through its QIP.

On 24 October, the central government announced its plan to support PSU banks with Rs2.11 trillion bank recapitalization programme.

QIP fund-raising activity, which has reached record high levels this year, has been dominated by the banking sector.

According to data from primary market tracker Prime Database, till November, 33 companies have raised Rs45,762 crore.

Fundraising activity this year has seen banks such as State Bank of India (SBI) and Kotak Mahindra Bank raising the largest QIPs ever seen from a public and private sector company, respectively. In June, the country’s largest lender SBI raised Rs15,000 crore through a QIP, while in May, Kotak Mahindra Bank raised Rs5,803 crore through its institutional share sale.

Other banks that have tapped the QIP route this year include Yes Bank, Federal Bank, DCB Bank and United Bank of India.