Punjab & Sind Bank IPO

The initial public offer (IPO) of state-owned Punjab& Sind Bank (PSB) will hit the market early next month. It will be an issue of 40 million equity shares with a face value of Rs 10 each. The IPO will see an equity dilution of 17.9 per cent. The government stake in the bank will fall to 82.1 per cent after the offer.

“We are planning to launch it in the first fortnight of December. The funds will be used to scale up lending and meet our requirements for the next two-three years. Besides getting us capital for expansion, listing will put a lot of positive pressure on us to perform,” said Executive Director PK Anand.
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PSB, the only unlisted public sector bank in India, may give a five per cent discount to retail investors and employees. The board is meeting next week to consider the proposal.

The bank was earlier planning to launch the IPO in July. It deferred the issue as the board had to rework plans in line with the government rule on minimum 25 per cent public shareholding. Later, the rule was relaxed, allowing the bank to go ahead with its earlier plan for 17-18 per cent equity dilution.

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Anand, however, said the five-month delay proved to be a blessing in disguise as the markets were now looking better, especially after the Coal India issue, which “charged up public sentiments and retail investors came in a big way”.

The government owns 100 per cent stake in the bank. The bank has approached the government for a capital infusion of Rs 700 crore to shore up its Tier-I capital above eight per cent. It has not yet received any response from the government.

PSB had filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India in August. The market regulator gave its comments to the New Delhi-based bank on the DRHP. PSB will file a revised DRHP this week. SBI Capital Markets Limited, Enam Securities Pvt Ltd and ICICI Securities Limited are the book running lead managers to the issue.
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In 2009-10, the bank posted an 18 per cent jump in net profit at Rs 508.8 crore, compared with Rs 431.1 crore in the previous year. Total income rose 19 per cent to Rs 4,345.9 crore while net interest income grew 17 per cent at Rs 1,183.9 crore and business rose by 37.9 per cent at Rs 81,894 crore.