Public sector lender Indian Bank plans to raise Rs 1,600 crore through follow on public offering (FPO), which is expected to hit the stock market by June 2011.
“Our board has already approved the proposal for an FPO,” said TM Bhasin, chairman and managing director, Indian Bank.
“We will file the DRHP (draft red herring prospectus) with market regulator SEBI by April and come out with the issue in end May or June.”
The bank will issue 10% fresh shares in addition to its current equity base of around 430 crore shares, Bhasin said.
Going by the current market price, the issue size may go up to Rs 1,600 crore (The Indian Bank scrip closed at Rs 282 on Friday on the BSE).
The Centre, which holds 80% equity in the Chennai-headquartered bank, will not subscribe for shares in the FPO.
“The proceeds from the FPO will be used for augmenting its capital adequacy ratio," Bhasin said, adding, that the bank’s current capital adequacy ratio of 12.9 % will go up considerably after the FPO.
The bank will achieve a credit growth of 29 per cent in the current fiscal year and a deposit growth of up to 23%, both of which are above the industry average, Bhasin said. The Reserve Bank of India’s credit offtake target for the year is around 19-20%.