Tag: qualified institutional placement

Bank of Maharashtra plans to raise up to Rs 2,000 crore through QIP

Banking & Finance

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State-run Bank of Maharashtra is looking to raise up to Rs 2,000 crore through qualified institutional placement (QIP) route before July-end, its Managing Director and CEO A S Rajeev said.

In April this year, the Pune-based lender had received board approval to raise Rs 5,000 crore by way of QIP/rights issue/ preferential issue or by issuing Basel III bonds.

“We are planning to raise around Rs 2,000 crore equity through QIP immediately. The process has already started and we will raise it before July-end,” Rajeev told PTI in an interaction.

The base size of the issue is Rs 1,000 crore and it has a greenshoe option of another Rs 1,000 crore, he said.

Following this equity raise, the Government’s holding in the bank will reduce to below 85 per cent from 94 per cent currently, and the capital adequacy ratio will improve to 17-18 per cent from around 14.49 per cent as of March 31, 2021, Rajeev said.

This fund will be deployed for expansion of the loan book, which the bank is looking to grow by 16-18 per cent to around Rs 1.25 lakh crore in this fiscal from Rs 1.08 lakh crore as of March 31, 2021, he said.

Of the total loan book of the bank at present, the share of corporate loans is 37 per cent and of retail, agriculture and MSME (RAM) segment is 63 per cent, he said adding, “We want the ratio of RAM to the corporate segment to be 65:35 during the current fiscal.” The bank is envisaging a 20-25 per cent growth in the retail, agriculture and MSME (RAM) segment this year. The lender’s corporate loan size is close to Rs 40,000 crore and it is targeting to grow it by another Rs 10,000 crore in this financial year. It has a sanction pipeline of Rs 25,000 crore in the corporate and MSME segments for the current fiscal, he said.

“We have churned our portfolio with improvement in the share of lending to better-rated corporates. This will minimise the delinquencies and attract lower capital requirement,” Rajeev added.

In the corporate segment, the bank will continue lending to better-rated corporates, including sunrise sectors such as infrastructure, pharmaceuticals and FMCG, he said.

Under the government’s Emergency Credit Line Guarantee Scheme (ECLGS), the bank’s total disbursement, so far, is around Rs 2,100 crore, and it plans to lend another Rs 500 crore this year.

Rajeev said the bank’s exposure to the healthcare sector is Rs 2,000-2,400 crore, which is 2 per cent of the total advances portfolio. In April and May, it had already disbursed over Rs 225 crore to the sector.

“We intend to double our portfolio under the healthcare sector and make it 4 per cent of our total advances portfolio during the current fiscal. We have also come out with two to three products in tune with the RBI policy,” he said.

Last month, the RBI had announced an on-tap term liquidity facility of Rs 50,000 crore under which banks can provide fresh lending support to a wide range of entities from the healthcare segment. The government has also announced ECLGS 4.0, under which a 100 per cent guarantee cover to loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.

Rajeev further said since the exit from the RBI’s prompt corrective action (PCA) framework in January 2019, the lender has taken several steps to strengthen its balance sheet, which has resulted in a significant improvement in all its financial parameters.

“We have been successful in registering profits quarter on quarter since March 2019. Our net profit rose 41.39 per cent to Rs 550 crore during FY21 from Rs 389 crore in FY20. Operating profit also rose 39 per cent to Rs 3,958 crore in FY21 from Rs 2,847 crore last year,” he said.

The bank’s CASA (Current Account and Savings Account) improved to 54 per cent as of March 31, 2021, which according to Rajeev is one of the best in the banking industry.

The bank has also managed to bring its gross non-performing assets to 7.23 per cent as of March 31, 2021, from 18.64 per cent in September 2018, when it was under PCA. Net NPAs stood at 2.48 per cent as of March 31, 2021.

At present, market capitalisation of the bank stands at Rs 17,500 crore against Rs 3,948 crore as of March 2019, he said. In FY22, the bank is targeting to bring down gross NPA to below 6 per cent and net NPA to below 2 per cent. Net interest margins (NIM) will remain above 3 per cent in this fiscal, he said.

It has set a recovery and upgradation target of Rs 2,500-2,600 crore during the current year. The lender is also expecting Rs 500 crore recovery from written-off accounts in this fiscal, Rajeev said. The lender is looking at opening 200 banking outlets with a hub and spoke model in this fiscal, he added.

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PNB report higher stress levels a year after merging two banks, BFSI News, ET BFSI

Banking & Finance

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Ahead of its plan to raise funds via qualified institutional placement, Punjab National Bank (PNB) has revealed a pile of stressed loans.

As of December, the lender had 13.2% of loans with repayment overdue for more than one month.

It had a gross bad loan ratio of over 14% for the December quarter with most stressed segments being corporate loans and small businesses. MSME dominated loans those where repayments are overdue for more than thirty days or SMA loans.

PNB’s ratio of loans that were in default for anywhere between one and 90 days stood at 20% of the overall book at the end of 2020, according to the offer document issued by the bank. It witnessed a sharp increase in its stressed loans during the moratorium period last year.

SMA accounts

The special mention account (SMA)-2 loans, where repayments are overdue for 61-90 days, rose to 8.8% as on December 31, 2020, from 2.74% as on September 30, 2020.

The SMA loans as of December 31, 2020, also include loans that were not being classified as non-performing assets (NPAs) in line with the Supreme Court’s interim stay on recognition of fresh bad loans after August 31, 2020.

With the stay vacated on March 23, these loans are likely to slip into NPAs as of the March quarter of FY21.

About 2.89% of MSME advances were classified as SMA 2 while 2.72% loans in the corporate sector were unpaid between 61 and 90 days.

In Bank of Baroda‘s offer document too, the bank’s SMA ratio surged to 21.57% as on December 31, 2020, from 8% on March 31, 2020.

These are likely to slip into the NPA bucket in the March quarter of FY21 as the stay was vacated on March 23.

while both banks had around 20% of their loans under SMA, PNB carried a much higher ratio of SMA 1 and 2 loans — 13% — compared to 9% for BoB. Segment-wise, SMA2 for PNB is nearly double that of BOB in the retail and corporate sector.

The QIP

PNB board has approved raising equity capital from qualified institutional investors to enhance its capital base. For the Qualified Institutional Placement (QIP) purposes, the bank has fixed the floor price at Rs 35.51 per equity share. The ”Relevant Date” for the purpose of the QIP is May 10, 2021 and accordingly the floor price in respect of the aforesaid QIP, based on the pricing formula as prescribed under SEBI ICDR Regulations is Rs 35.51 per equity share, PNB said in a regulatory filing.

The merger

Last year, Oriental Bank of Commerce (OBC) and United Bank of India (UBI) were merged into Punjab National Bank (PNB), making PNB India’s second-biggest public sector bank after State Bank of India (SBI).

In a first three-way amalgamation, Vijaya Bank and Dena Bank were merged with Bank of Baroda from April 1, 2019.



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IDFC First Bank raises Rs 3,000 cr equity capital through QIP, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: IDFC First Bank has raised Rs 3,000 crore through QIP in which global marquee investors like BNP Paribas and Baillie Gifford participated alongside domestic players such as Bajaj Allianz Life and HDFC Life.

The qualified institutional placement (QIP) closed on Tuesday and the lender issued 52.31 crore fresh equity shares at Rs 57.35 per share.

“On April 6, 2021, the bank has raised Rs 3,000 crore through Qualified Institutional Placement to marquee international and domestic investors by issuing 52.31 crore fresh equity shares having face value of Rs 10 each, at a price of Rs 57.35 per share,” IDFC First Bank said in a regulatory filing on Wednesday.

Out of this, 68.33 per cent of the allotment was made to foreign investors and 31.67 per cent to domestic investors.

Pursuant to the allotment of equity shares in the issue, the paid-up equity share capital of the bank stands increased from Rs 5,675.85 crore to Rs 6,198.95 crore, it said.

As many as eight investors subscribed to more than 5 per cent of the shares offered in the QIP.

These are: Bajaj Allianz Life Insurance 11.98 per cent, Baillie Gifford Emerging Markets Equities Fund 11.39 per cent, Baillie Gifford Pacific Fund (a sub fund of Baillie Gifford Overseas Growth Fund) 8.95 per cent, and BNP Paribas Arbitrage-ODI received 8.62 per cent of the shares in the issue.

City of New York Group Trust was allotted 8.53 per cent shares under the QIP, Baillie Gifford Emerging Markets Growth Fund 6.79 per cent, HDFC Life Insurance 6.67 per cent and Tata AIA Life Insurance 5.83 per cent.

The private sector bank also released some provisional data, witnessing over 10 per cent yearly growth in its total funded assets at Rs 1,17,803 crore as of March 31, 2021 from Rs 1,07,004 crore a year ago.

Total consumer deposits grew by 43.15 per cent year-on-year to Rs 82,628 crore from Rs 57,719 crore for the period.

Bank’s CASA deposits (current account and savings account) jumped by 122.74 per cent to Rs 46,022 crore from Rs 20,661 crore by March 2020. The CASA ratio stood at 51.95 per cent by end of March 2021, up from 31.87 per cent by year ago same period.

However, the top 20 depositors’ concentration witnessed a decline at 7.76 per cent against 20.26 per cent.

IDFC First Bank said these figures are being released under Sebi norms on disclosure requirements. The figures mentioned as on March 31, 2021 are provisional and subject to audit undertaken by the statutory auditors of the bank, it added.



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QIBs allotted 55 crore shares worth ₹4,500 crore

Banking & Finance

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Eligible qualified institutional buyers (QIBs), including BNP Paribas Arbitrage, SBI Life Insurance Company and Life Insurance Corporation of India, have been collectively allotted about 55 crore equity shares aggregating about ₹4,500 crore by the Capital Raising Committee of the Board of Directors of Bank of Baroda (BoB).

BoB’s qualified institutional placement (QIP) issue opened for subscription on February 25, 2021 and closed on March 2.

According to the bank’s regulatory filing, the issue price of ₹81.70 per equity share (including a premium of ₹79.70 per equity share) was at a discount of 5 per cent to the floor price of ₹85.98 per equity share determined as per SEBI Regulations for equity shares to be allotted to eligible QIBs in the issue.

The QIBs who have been allotted more than 5 per cent of the equity shares offered in the issue include BNP Paribas Arbitrage (11.26 per cent of the issue size), SBI Life Insurance Company (11.11 per cent), Life Insurance Corporation of India (10.44 per cent), and Nippon India Large Cap Fund and ICICI Prudential Business Cycle Fund (10.17 per cent each).

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