Indian IPO

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Wednesday, May 23, 2007

Central Bank files IPO prospectus with SEBI

Central Bank of India, one of the few government-controlled banks yet to tap the capital market, has filed its draft prospectus for an initial public offering with the capital markets regulator Sebi to raise close to Rs 1,000 crore.

The bank, which is planning to launch a public offering of eight crore shares, is likely to price its issue at close to Rs 110 per share. Central Bank, like other banks in the country, needs funds to bolster its capital base to feed rising demand in an economy, which has recorded an average growth of 8% during the last four years.

The public offer will help the bank bolster its capital adequacy ratio now at 10.4%. The beefing up of its capital base will also aid the bank in fulfiling regulatory norms for banks with overseas operations. Central Bank CMD HA Daruwalla had said earlier.

The controlling interest of the government in Central Bank of India will drop to 80.2%, post-IPO, which is high compared to other state-owned banks where it is below 60% on an average. After the Central Bank IPO, the only two remaining unlisted state-owned banks will be Kolkata-based United Bank of India and Punjab and Sindh Bank.

In the run-up to the IPO, Central Bank has restructured its capital base by converting Rs 800 crore from its total equity capital of Rs 1,124.14 crore into perpetual non-cumulative preference shares. This exercise was aimed at boosting the earnings per share.

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