Mumbai, Oct 8: The Rs 125 crore maiden public offering from Syndicate Bank is the first at par initial public offering from a public sector bank in the country. Earlier during the year, the IPOs from two private sector banks, TimesBank and Centurion Bank, were also priced at par. Against the bank's present book value of Rs 20.13 per share, the current offer is at almost 50 per cent discount.
The Manipal-based Syndicate Bank is offering 12.5 crore equity shares through the present issue, which is scheduled to open on October 25. The issue is being lead managed by SBI Caps, DSP Merrill Lynch, Kotak Mahindra Caps and I-Sec. Post-offer, the shares of the bank are to be listed at Mangalore, Mumbai, Bangalore and the national stock Exchanges.
The main objective of the current issue is to augment the capital base of the bank, which will help it meet its future capital adequacy requirements and to augment the long-term resources of the bank. Post-offer, the government holding in the bank will come down to around 76 per cent. Of the 12.5 crore equity shares on offer, 1.25 crore shares are reserved for employees and working directors of the bank.
For fiscal 2000, the bank has projected a net profit of Rs 236 crore from a total income of Rs 2858 crore. Post-issue, the capital adequacy ratio of the bank will rise to 10.25 per cent from the March 1999 level of 9.57 per cent.Currently, Syndicate Bank is focussing on three areas of financing - trade finance, consumer finance and housing finance. Trade finance forms around 15 per cent of its total lending portfolio and offers margins of three to four per cent. So far this year, the bank has disbursed Rs 700 crore towards housing loans, with the interest rates ranging from 14.5 to 16.5 per cent.
Speaking on the occasion of launching of its public issue, KV Krishnamurthy, chairman, Syndicate Bank, said with the stock market indices attaining new highs, it was the appropriate time for an initial public offering. The pricing was kept at the par value of Rs 10 in order to attract as many investors as possible, he explained.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.