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Punjab & Sind Bank to file draft prospectus by month-end

india Updated: Aug 24, 2010 19:55 IST

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The only unlisted state-owned lender Punjab & Sind Bank is likely to file draft prospectus with SEBI by the end of this month to raise about Rs 600 crore from its initial public offer (IPO).

"We would be filing our DRHP (draft red herring prospectus) by the end of this month," Punjab & Sind Bank Executive Director PK Anand told PTI.

As part of the IPO, he said, the government would offload about 18 per cent stake and the bank expects to raise Rs 500-600 crore from the public issue.

The fund proceeds would be utilised for business expansion. At the same time, the bank plans to increase its branch network from 918 to 1,000 by the end of March 2011

It is to be noted that the bank had earlier got approval from the government to offload 17 per cent stake but later revised the stake dilution to 25 per cent. This was done following the government's decision that all the listed companies should increase their public holding to a minimum of 25 per cent in a phased manner.

However, the government provided exemptions to few public sector entities, including Punjab & Sind Bank, from meeting this criterion.

Following the exemption, the bank pruned its IPO size to its original level of 18 per cent.

Currently, the government owns 100 per cent stake in the bank and is the only unlisted bank among 19 nationalised banks in the country.

The bank has appointed SBI Capital, ICICI Securities and Enam Securities as merchant bankers for its proposed IPO.

The government had restructured the equity structure of the bank in 2008. After the capital rejig, its equity capital came down to Rs 183.06 crore from Rs 743.06 crore.

In fiscal 2010, the bank posted an 18 per cent jump in net profit at Rs 508.8 crore compared to Rs 431.1 crore the previous year.

Total income rose by 19 per cent at Rs 4,345.9 crore while the net interest income grew by 17 per cent at Rs 1,183.9 crore and business rose by 37.9 per cent at Rs 81,894 crore at the end of 2009-10.