Indian IPO

All details about Hot Indian Primary Market.

Saturday, May 26, 2007

Binani Cement to list on May 28

Binani Cement, a subsidiary of Binani Industries, will list on Monday, May 28, 2007 with 20,31,01,274 shares on stock exchanges. The offer price has fixed at Rs 75 for its initial public offering (IPO) of 20,500,000 equity shares of Rs 10 each for cash, through an offer for sale by JP Morgan Special Situations (Mauritius).

The offer of equity shares was made through a 100% book building process and had a price band of Rs 75 to Rs 85 per equity share. The IPO was subscribed 1.36 times with the support from QIBs and retail investors (subscribed 1.32 times and 1.62 times, respectively).

The offer constitutes 10.09% of the post-offer paid-up capital of the company. The equity shares are proposed to be listed on the National Stock Exchange and the Bombay Stock Exchange.

It is focused on key markets in northern India with a significant presence in Rajasthan, Haryana and Delhi besides Gujarat in Western India. It has facilities for manufacture of 2.25 MTPA of cement. It manufactures OPC and PPC, with an OPC: PPC product mix of about 71:29 in fiscal 2005, 63:37 during fiscal 2006 and 51:49 for fiscal 2007. The Sirohi facility has been set up with the support of the Denmark-based F. L. Smidth and Larsen and Toubro Limited.

The book running lead manager to the offer is ICICI Securities Primary Dealership Limited and the co-book running lead manager is JP Morgan India Private Limited.

Syndicate Bank seeks shareholders' nod for FPO

Public sector lender Syndicate Bank is seeking shareholders' approval for the proposed follow-on public offer (FPO) of eight crore shares, to meet Basel II requirements and expansion plans.

The Manipal-based bank today informed the Bombay Stock Exchange that its shareholders would consider the proposal on June 21 at the 8th Annual General Meeting (AGM).

As per the proposed issue, Syndicate Bank would issue up to eight crore equity shares of Rs 10 each, aggregating to not more than Rs 80 crore, to individuals, companies, FIIs, financial institutions, banks, qualified institutional buyers etc, subject to necessary provisions and approvals.

The bank has earlier said it would use the proceeds to meet the capital requirements under Basel II guidelines as the bank has the overseas presence. Besides, it would also be utilised for the expansion activity.

According to the RBI's guideline, banks with overseas branch are expected to comply with Basel II guidelines for operational risk by the end of March 2008.

The price for the issue would be determined later, subject to necessary approvals from the Government, Reserve Bank and other statutory bodies.

Currently, the government holds 66.47% stake in the lender, whose CAR stood at 11.74% as of March 31. The Tier I ratio was placed at 6.24% and the Tier II ratio stood at 5.50% as of March 31.

State Bank of India, ICICI Bank, HDFC Bank and Federal Bank have already announced plans to raise capital from the equity offering.

Shares of Syndicate Bank were last trading at Rs 77.85, down 0.64 per cent on the BSE.

Centre may divest 5% in OIL

The oil sector may see the first disinvestment under the UPA government. The ministry of finance has asked the petroleum ministry to incorporate 5% divestment of government equity in Oil India (OIL) along with the company’s 10% initial public offer (IPO).

Sources said the ministry of petroleum had forwarded the IPO proposal to the ministry of finance that suggested 5% disinvestment could piggyback with the raising of fresh equity through the IPO.

Such a model of disinvestment has been followed in the case of power sector public sector unit NTPC and will be followed for PowerGrid, National Hydroelectric Power Corporation (NHPC) and Rural Electrification Corporation.

Senior officials said, the petroleum ministry has not firmed up its view on the disinvestment proposal though about two years back the then petroleum minister Mani Shankar Aiyar had rejected the proposal. “The views may change and the way for OIL disinvestment may clear,” said an official.

OIL has 98.2% Union government holding with the remaining held by employees. Sources said a 15% offering in the IPO would reduce the government holding to about 84.4% that would still be quite substantial. OIL currently has a paid-up equity of Rs 214 crore with an authorised equity of Rs 500 crore.

The IPO proposal may now have to be reworked and may be piloted by the department of disinvestment since it may involve sale of government equity. The proceeds from 5% sale will go to the government’s National Investment Fund with 10% sale proceeds going to the company itself.

“The proceeds going to OIL would be utilised for expansion plans of the company, both within and outside the country,” said an official. Besides, listing of the company would lead to enhancement of its valuation and improve its chances of securing overseas upstream (oil exploration and production) contracts. “An unlisted company is not viewed very favourably overseas when it comes to award of contracts,” he said.

OIL is planning to invest Rs 15,000 crore in the next five years in exploration and production sector in India and abroad and another Rs 2,000 crore in refining. Funds raised from the IPO would also enhance the company’s ability to raise debt.

Friday, May 25, 2007

DLF sets IPO price band at Rs 500-550; opens on June 11

Delhi based real estate major, DLF has fixed price band of its IPO between Rs 500 and Rs 550 per share. The issue will open on June 11 and close on June 14, 2007.

Issue size is at around USD 2.2-2.4 billion with the market cap of USD 21-23 billion.

DLF is offering 175,000,000 equity shares of Rs. 2/- each to the public, through a 100% book building process. The issue comprises reservation of 1,000,000 equity shares of Rs. 2/- each for subscription by the employees of the company and a net issue to the public of 174,000,000 shares.

The issue would constitute 10.27% of the fully diluted post-issue capital of the company.

The objects of the issue are to augment the company's capital base to meet the future capital requirements arising out of growth of the company's assets.

Kotak Mahindra Capital and DSP Merrill Lynch are the global coordinators and book running lead managers and Lehman brothers securities Pvt. Ltd is the senior book running lead manager. Citigroup Global Markets India Pvt. Ltd, Deutsche Equities India Pvt., Ltd., ICICI securities Primary dealership Ltd, UBS Securities India Pvt. Ltd. are the book running lead managers to the issue. SBI Capital Market is the co-book running lead manager and Karvy Computershare Private Limited is the registrar to the issue.

Frankfinn to start airline by 2009; plans IPO

Moving a step further from creating manpower for the aviation industry, Frankfinn Aviation Services Pvt Ltd on Thursday said it will start a low-cost airline by 2009 and plans to tap the capital market for funding the new venture.

"After having established strong presence in training of skilled manpower for the industry, we are planning to start an airline named 'Air Frankfinn' by the end of 2009 or early 2010," Frankfinn Aviation Services chairman K S Kohli told the media.

"It will be a low-cost airline with frills. We will offer lot of exclusive services and make other airlines run for their money," he said.

Kohli said the company is in the process of appointing an aviation consultant and would file an application with the government seeking permission for the airline in next three to four months.

The company plans to start-off with a fleet size of five aircraft, of which three would be big and two smaller ones.

"Initially we will have five aircraft, of which three would be possibly either Airbus or Boeing. In next three years from the day we start operations, the plan is to have at least 25-30 aircraft in the fleet," Kohli said.

The company also has plans to mop up funds from the capital market with an initial public offer (IPO) in 2009, to support the airline project and other expansion plans, he said.

Kohli, however, did not reveal the sum Frankfinn was planning to raise, saying "it is premature to talk about figures."

BSE likely to list on NSE without IPO

Listing without making an initial public offering? That is an option being explored by the 132-year old Bombay Stock Exchange (BSE), which recently offered stake to institutional and individual investors under its demutualisation process.

Having completed the process, the BSE is now looking to list, on the NSE and BSE, so that the shares can be traded. While BSE’s chief executive officer and managing director Rajnikant Patel has been saying that the exchange has no plans to list soon, broker members, who own stake in the bourse, are demanding that it should look to list at the earliest.

They feel the shares will get a better valuation in the secondary market. The BSE may be treated as a special case and exempted from going to the public for listing purpose, according to brokers.

The possibility of listing without an IPO also emerges due to the fact that the BSE is flush with cash and can meet its financial requirements without raising additional funds through an IPO.

Over the past several years, the BSE’s net worth has improved significantly and stood at Rs 927 crore as on March 31, 2006. The sale of 10% stake to two global stock exchanges - Deutsche Boerse and SGX - have added about Rs 450 crore to the BSE’s reserves.

Merchant bankers say, technically, a company can list shares without IPO provided part of its equity is held by investors other than promoters. Citing an example, a senior official with a leading Mumbai-based merchant banker said, “In early 90s after the government liberalised the economy, many PSUs divested a small part of their equity in favour of institutional investors and got listed on stock exchanges.

With the divestment of broker members’ stake, it is possible for the BSE to list shares, as 51% of its equity is now held by the public, the official said. Under the demutualisation scheme, the exchange has offered stakes to different investors at Rs 5,200 per share.

Apart from the two foreign stock exchanges, the list of shareholders also includes leading financial institutions like LIC and UTI, Bank of India, Bajaj Auto, a corporate shareholder, and a few foreign private equity investors. Post-demutualisation, the BSE has an equity capital of about Rs 85 lakh, representing as many shares of Re 1 each.

A company should have capital of at least Rs 10 crore to become eligible for listing on the NSE and Rs 3 crore for a BSE listing. In case the BSE decides not to make a public issue, it would have to raise equity by issuing additional shares in the form of rights or bonus, say brokers.

Sahil Group plans to go public with IPO

Pune-based Sahil Group has today announced that its group company Sahil Resorts, Agrifields and Farms Pvt Ltd has now become a public limited company. This company has interest in hospitality sector and has properties such as SAHIL SAROVAR Portico in Lonavala and is currently working on Asia’s largest Spa in association with Radisson Group of Hotels & Mandara Spa at Alibaug.

Speaking on this development Vinay Phadnis, chairman & managing director, Sahil Group said, “This is the result of the faith reposed on us by our patrons and stakeholders. As a growing company we intend to take on more responsibility and plan bigger things. In this regard, we would like to take a step forward and go public soon via the IPO route. I would like to mention here that EXIM bank has invested in our company’s debentures.”

Phadnis further unveiled Sahil’s plans to develop five star luxury hotels in Pune, Navi Mumbai, Delhi and Goa investing around Rs 1000 crore in next 3 years. Most of them will be funded by the money generated through the IPO.

About sahil group

Sahil Group has three main areas of interest viz Spa & Resorts, Real Estate and IT. In the next five years Sahil has plans to invest Rs 100 crore in various real estate projects across destinations in India and abroad (Sri Lanka) to develop Spas & Resorts.

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.

Omaxe IPO gets SEBI nod

Real estate developer Omaxe on Tuesday received market regulator Securities and Exchange Board of India’s, (Sebi) approval for its initial public offer, estimated to raise up to Rs 1400 crore (Rs 14 billion).

A company spokesperson confirmed that it has received Sebi’s nod for the public issue. Omaxe had filed the draft red herring prospectus (DRHP) with Sebi in last December.

The approval comes close on the heels of realty giant DLF getting clearnce for IPO from Sebi earlier this month. Omaxe proposes to enter the capital market with a public issue of up to 1.77 crore equity shares of Rs 10 each through a 100% book-building process.

The proceeds of the issue would be utilised for payments related to land, repayment of loan and to fund the development and construction costs of some of the company’s projects.

The issue would constitute 11.20% of the fully-diluted post-issue paid-up capital of the company, if the green shoe option is exercised and 10.30%, if the option is not exercised.

Tuesday, May 22, 2007

Decolight to issue shares to raise capital for expansion

Decolight Ceramics, a manufacturer of vitrified ceramic tiles, plans to enter the capital market by issuing equity shares of Rs 10 each at a price band of Rs 45-54 per share.

The company plans to raise Rs 43.45 crore through a 100% book building process.

The issue opens on May 24 and closes on May 29.

Chairman Girishbhai Pethapara says The objective of the issue is to raise capital to finance its expansion, which includes raising capacity of vitrified tiles from 6,000 sq. m to 12,000 sq. m, per day.

It has also proposed to set up two wind generators having a capacity of 1.25 MW and 2.1 MW each.

The company also plans to increase its Aluminium Composition Panel production to 5,000 sq. m per day.

Syndicate Bank plans follow-on public issue

Syndicate Bank has proposed a follow-on public issue of 8 crore equity shares in the current financial year for meeting its capitalisation requirements.

The decision was taken at its board meeting. The bank said in a stock exchange notification that the issue would be subject to approvals from the Government and the Reserve Bank of India. The pricing of the issue has not been decided, though it is likely to be at a discount to the market price.

The follow-on issue is expected to dilute the government stake further. Currently, the government stake in the bank is 66.47%. With the proposed issue, the government stake is expected to come down to 57.64%. The bank's paid-up equity would rise to 60.19 crore shares.

The issue is being raised to meet the bank's capital requirements for meeting its ambitious growth targets. Besides, Syndicate Bank has a branch in London.

According to the RBI's guideline, banks with global operations are expected to comply with Basel-II guidelines for operational risks by the end of March 2008.

Wednesday, May 16, 2007

ICICI Bank to raise Rs 20,125 cr via FPO

ICICI Bank is planning to raise over 20000 crore through Follow on Public Offer of equity shares and American Depository Shares for augment their capital base to meet their future capital adequacy and to meet requirements arising out of growth in their businesses and for other general corporate purposes.

JP Morgan Stanley has come out with a report on ICICI Bank FPO. Here are the key takeaways of report.....

The Issue ICICI Bank Limited



Transaction Domestic Public Issue of shares – 100% Book Building



Issue Size Follow on Issue of (*) equity shares of Rs 10 each (including a greenshoe option). The Follow – on Domestic Issue and an issue of American Depository Shares of upto (*) million (including a greenshoe option) will comprise 25% of ICICI Bank’s authorised equity share capital.



Exchanges Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE),



Book Running Lead Manager JM Morgan Stanley Private Limited, DSP Merrill Lynch Limited, Enam Financial Consultants Pvt Limited, Goldman Sachs (India) Securities Private Limited,



Co- Book Running Lead Manger - ICICI Securities Primary Dealership Limited



Registrar Karvy Computershare Private Limited





The combined issue i.e the Domestic Issue + Issue of American Depository Shares will be approximately Rs 20,125 crores





Objects of the Issue



Requirement of Funds: Augment their capital base to meet their future capital adequacy requirements arising out of growth in their businesses and for other general corporate purposes



Company Overview:



They are a private sector commercial bank and, together with their subsidiaries, offer products and services in the areas of commercial banking to retail and corporate customers (both domestic and international), treasury and investment banking and other products like insurance and asset management.



International Presence:



Subsidiaries - United Kingdom (branch in Antwerp – Belgium), Canada, Russia



Branches – Singapore, Dubai, Sri Lanka, Hong Kong, Bahrain



Approval from the RBI and Qatar Financial Centre Regulatory Authority to setup a branch in Qatar



Representative Offices – United States, China, United Arab Emirates, Bangladesh, South Africa, Malaysia, Thailand, Indonesia



Subsidiaries



ICICI Securities and ICICI Securities Primary Dealership: Equity underwriting and brokerage and primary dealership in Government securities. ICICI Securities owns ICICIDirect.com, a leading online brokerage platform.



ICICI Venture Funds Management Company: Venture Capital and Private Equity Fund Management



ICICI Prudential Life Insurance Company, ICICI Lombard General Insurance Company and ICICI Prudential Asset Management Company: Provide a wide range of life and general insurance and asset management products and services to retail and corporate customers

Friday, May 11, 2007

Suryachakra Power gets SEBI nod for IPO

Suryachakra Power Corporation has got the nod from the Securities & Exchange Board of India (SEBI) for its issue of 3.4 crore equity shares of Rs 10 each through the book building route.

The Hyderabad-based company is slated to hit the capital market in June 2007. The purpose of the issue is to raise funds for investment in one of its subsidiary MSM Energy and augment the working capital needs, power trading and general corporate purpose.

Suryachakra is running an independent power plant in Andaman & Nicobar Islands and is implementing two renewable energy projects in Chhattisgarh as 100% subsidiaries, according to a press release, reports The Hindu Business Line.

Tuesday, May 08, 2007

DLF IPO gets SEBI nod; to dilute 10% equity

Delhi-based real estate company, DLF has got SEBI clearance for its IPO today. The management has not yet decided on the timing or the pricing of the IPO, informs DLF. The issue will involve an equity dilution of 10%, informs DLF.

Rajeev Talwar, Group Executive Director at DLF says that their current land bank is at 10,255 acres and they have no land bank valuations in DRHP for now.

DLF was planning an IPO of 17.5 cr shares worth USD 2.5 billion (Rs 11,000 crore) of Rs 2 each through 100% book building process.

Overall, the company plan to reserve 2 lakh equity shares for allotment to employees. Of the balance, 60% will be allotted to QIBs (qualified institutional buyers) and at least 10% will be available for non-institutional investors. Retail investors will be allocated 30% of the shares.

Monday, May 07, 2007

Brahamputra Consortium files DRHP with SEBI

Infrastructure project development company Brahamputra Consortium (BCL) has filed its draft red herring prospectus, DRHP with stock market regulator SEBI seeking to tap the capital market.

The company seeks to issue 4.2 million equity shares of Rs 10 each at a price band to be decided later. The issue is through a 100% book building process.

BCL has an order book position of Rs 7,309.38 million as on January 1, 2007 with a well diversified project portfolio such as roads and highways, airports, tunnels, rail over bridges, mining, hydro power projects and real estate.

NHAI, MMRDA, IIT, IRCON, PWD, Airports Authority of India, J&K Economic Reconstruction Agency are among the clients for whom BCL is executing the projects.

The company wants to use the net proceeds of the IPO for purchasing capital equipment, augmenting its working capital requirements and investment in BOT projects.

NFPIL IPO opens on May 15 with price band at Rs 171-190

Nitin Fire Protection Industries, NFPIL, is entering the capital market with an initial public offer of 33,90,000 Equity Shares of Rs 10 each with an employee reservation of 1,50,000 equity shares for cash at a premium to be decided through the 100% Book-Building Process. The Price Band of the Issue has been fixed between Rs 171 and Rs 190 per equity share. The subscription to the Issue opens on May 15, 2007 and closes on May 18, 2007. The net issue will constitute 25.71% of the post-Issue paid-up capital of the Company.



Of the Net Issue to the public, at least 50% shall be allotted to Qualified Institutional Bidders ("QIBs"), of which 5% shall be reserved for allotment to mutual funds only. Further, not less than 15% of the Offer shall be reserved for allocation to Non-Institutional Bidders and not less than 35% shall be available for allocation to Retail Individual Bidders. The Issue will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).



NFPIL is an established player in Fire Protection, Safety and Security Solutions Business as well as Cylinders & Refueling Systems, since more than a decade. Starting from the basic level fire extinguishers to the sophisticated gas based suppression systems for 'mission critical' areas, NFPIL provides a wide and diverse range of product and services, through tie-ups with overseas manufacturers and design innovators. The Company is managed by professionals having experience in Fire Protection and Security solutions as well as Cylinders and Refueling systems.



NFPIL is proposing a Public Issue to set up a high-pressure seamless cylinder plant at the Visakhapatnam Special Economic Zone through investment in their wholly owned subsidiary, Nitin Cylinders Limited (NCL).



The proposed facility will have a capacity to manufacture 5,00, 000 cylinders per annum. In order to derive the commercial benefits of the proposed investment in shortest possible time, the implementation of the project has been divided into two phases with a manufacturing capacity of 250,000 cylinders p.a. in each phase. Accordingly, Mott MacDonald (IMM) has done a feasibility study of the said Project.



The rapid proliferation of malls and multiplexes in India as well as growth in the manufacturing segment, particularly pharmaceuticals and automotive industries has created growth opportunities for security systems. As per the Company's estimates, there are about 360 malls are under construction in various cities and towns. Out of these 225 are being constructed in top seven cities and balance are being constructed in 50 small cities. All these malls will be an opportunity for the companies in the business of Intelligent Building Management Systems.



During the fiscal year 2006-07, NFPIL has recorded a Total Income (Consolidated) of Rs 1,017.11 million and a Net Profit (After Taxation) of Rs 99.86 million as against the Total Income of Rs 726.06 million and a Net Profit of Rs 65.26 million in the previous fiscal 2005-06. As on March 31, 2007 , the Net Worth (Consolidated) of the Company was Rs 341.80 million.



Karvy Investor Services Limited and UTI Securities Limited are the Book Running Lead Managers ("BRLMs") to the Issue.

Friday, May 04, 2007

Asahi Songwon plans Rs 33.5cr IPO; price band at Rs 90-108

Asahi Songwon Colors (ASCL), a manufacturer of pigments, proposes to enter the capital market with an initial public offering, IPO of Rs 33.5 crore. The issue, which is being made through a 100% book building process will open on May 9 and close on May 15.

The price band has been fixed at Rs 90-Rs 108 per equity share.

The company manufactures CPC Blue Crude and Pigment Green and has an installed capacity of 3,600 tonnes per annum and 1,200 tonnes per annum, respectively. The proceeds of the issue will be utilised to part finance the company's expansion plan of Rs 52 crore, which includes increasing the CPC Crude capacity to 10,800 MPTA, setting up a 1200 MPTA Pigment Beta Blue manufacturing facility and a 2 MW captive power plant.

DIC investments

Japan-based Dainippon Ink and Chemicals (DIC) has recently invested Rs 10.5 crore on acquiring 8,65,200 equity shares of ASCL for Rs 122 per share. DIC would hold around 7.5% stake in the company after the IPO.

The balance cost of the project is being funded by a term loan of Rs 8 crore from SBI Bank. Post issue, the promoters stake will come down to 59-60%.

"We are concentrating on exports. More than 90% of our topline comes from exports," said Gokul Jaykrishna, executive director, Asahi Songwon Colors.

The expansion (except the power plant) is expected to be completed by November 2007 while the power plant will be installed by March 2008.

Fortune Financial Services is the book running lead manager to the issue, reports The Hindu Business Line.

Thursday, May 03, 2007

Insecticides sets IPO price band at Rs 97-115

Insecticides (India) (IIL), which is into manufacturing and distribution of plant protection chemicals and house hold pesticides, will be entering the capital market with an initial public offering of 32.10 lakh shares of Rs 10 each at a premium to be decided through a book building process.

The price band of the issue is between Rs 97 and Rs 115 per equity share and is scheduled to open on May 7 and close on May 11.

In a press conference, Pradeep Aggarwal, chief financial officer, IIL, said, "The proceeds of the IPO will be used to set up a formulations plant at Samba (Jammu & Kashmir) and set up a manufacturing technical plant and research and development (R&D) facility at Chopanki (Rajasthan)", reports The Hindu Business Line.

Tuesday, May 01, 2007

ICICI Bank to raise Rs 20,000 crore

The country’s largest private sector player, ICICI Bank has decided to raise fresh equity capital to the tune of Rs 20,000 crore via issuances, both in the domestic market and by issue of American Depository Shares (ADS) in the international market. This will be the largest follow-on public issue in the country.

The board of directors of the bank approved the raising of capital at the meeting held on Saturday. The bank plans to raise up to Rs 15,000 crore through the ADS issue, while around Rs 5,000 crore will be raised through a follow-on public offer in the domestic market, of which 50% will be kept open for subscription from retail investors. The IPO process is expected to kick off on Monday. “The issue is likely to hit the market by June 2007. The bank may look at greenshoe options going forward, if required,” said K V Kamath, the bank’s MD and CEO.

However, the raising of fresh equity capital will be subjected to an approval from the shareholders. The issuance is likely to offload up to 20% of the bank’s stake. Kalpana Morparia, the bank’s joint managing director, said, “The banking system is likely to witness 20-25% growth in credit during the current financial year. The new guidelines for capital adequacy released by the Central bank, coupled with strong demand for credit from the corporate sector necessitates that the bank adopts a proactive approach towards capital raising activities.”

This apart, the bank also plans to utilise the proceeds of the issuances for catering to demand from the rural markets also. Morparia pointed out that the funds mobilised through these issuances should take care of the bank’s funding requirements at least for the next two-three years.

In another development, the bank’s board of directors also approved the elevation of Madhabi Puri Buch to the post of an executive director. The board also took into account the results of the bank for the year ended March 2007. The bank reported a 4% growth in its net profit for the quarter ended March 31, 2007, as it was hit by a one-time charge of Rs 310 crore towards general provisioning norms proposed by the central bank in January 2007.

In its quarterly policy review in January 2007, the RBI had raised the provisioning requirement for standard assets in the real estate sector, outstanding credit card receivables, loans and advances qualifying as capital market exposure and personal loans to 2%, reports The Economic Times.

SBH to go public after September

State Bank of Hyderabad (SBH), the largest associate bank of State Bank of India (SBI), intends go public after September 2007. The issue size is still undecided at this stage.

SBI holds 100% in SBH, which is preparing the groundwork for the proposed public issue in anticipation that the State Bank of India (Subsidiary Bank Laws) Amendment Bill will get Parliament clearance soon.

The cabinet has already given in-principle clearance. SBI has seven associate banks. All will stand to benefit once the Bill is enacted in Parliament. This will allow the seven associate banks to split their shares with face value of Rs 100 each to Rs 10 each.

That will also remove the present cap on individual shareholding limit of 200 shares in these banks. The stock-split exercise will improve shareholder value in these banks. At present, four of the seven associate banks — SBH, State Bank of Patiala, State Bank of Saurashtra and State Bank of Indore — are unlisted. On the other hand, State Bank of Travancore, State Bank of Mysore and State Bank of Bikaner and Jaipur are listed.

Following the stock-split exercise, SBH may also issue bonus shares to its parent to improve valuation of the shares before the IPO. SBH managing director Amitabha Guha refused to comment on the possibility of a bonus issue. He, however, admitted that the possibility for an IPO is brighter by several notches. “If the market remains favourable, we plan to go public around October 2007. The book value of SBH is currently at Rs 14,900 crore,” Guha said.

It is, however, still undecided how far SBI will dilute its holding in SBH. SBI is also likely to dilute its holding in State Bank of Patiala soon. The dilution of share in two of the associate banks will unlock huge value for SBI. The seven associate banks have a combined business of Rs 3.42 lakh crore. And SBH alone had a business mix (deposits and advances) of Rs 71,400 crore as on March 31, 2007.

SBH is aiming at 25% business growth for 2007-08. The bank is well capitalised with 12.5% capital adequacy ratio. “This fiscal, we have the option of raising Rs a total of Rs 1,000 crore by way of subordinated and perpetual bonds,” Guha said, reports The Economic Times.