Indian Bank to hit capital market with IPO of 8.9cr shares

RELATED NEWS Omnitech plans to enter capital market, files with Sebi Avoid Zenith Birla FPO: Angel Broking Angel Broking for private placement, IPO after expansion Cairn India files for $ 1.5-2 billion IPO Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

State-owned Indian Bank is likely to come out with an IPO of 8.9 crore shares in January next year, to raise Rs 800-1200 crore (Rs 8-12 billion) to augment its capital base and support business expansion, reports agencies.

"About 8.9 crore shares will be offloaded at a price to be decided through the book-building process," a senior Indian Bank official said.

This is 25% of the paid up capital of Rs 343.82 crore or 34.382 crore shares.

After the IPO, slated for January-end or February first week, the government holding will come down by 25% to 75% in the bank.

The Chennai-based bank is coming out with the IPO after a capital restructuring carried out last month.

Out of the Rs 743.82 crore paid up capital, the bank has converted Rs 400 crore into non-cumulative preferential shares and placed them with the Government. Indian Bank will pay an interest of 8% per annum for the preference capital.

"We will try to identify merchant bankers next week for the IPO, which should come by January-end or early February," Indian Bank Chairman A K Chakrabarty said.

He said the amount raised from the IPO would be used for meeting Basel II norms as well as to fund expansion plans.

Indian Bank along with Central Bank have been permitted by the government to go for IPOs after restructuring of their capital while United Bank is awaiting clearance for its IPO.

These are the three public sector banks in which, the government holds 100% stake.

IPO of the third bank -United Bank -will also be cleared "very soon", banking secretary Vinod Rai said.