IPO BUZZ

Central Bank of India IPO opens Wednesday :The initial public offering of Central Bank of India opens on Wednesday. The bank is offering 8 crore shares of Rs 10 each in the price band Rs 85-102 per share. The issue closes Friday. The bank will raise Rs 680 crore at the lower price band of Rs 85 and Rs 816 crore at the upper price band of Rs 102. The issue proceeds will help augment the capital base of the bank to meet future capital requirements. The bank has reserved 60 per cent of the float for qualified institutional buyers and 30 per cent for retail investors. Post issue, government shareholding in the bank will come down to 80.20 per cent.
Central Bank of India has fixed the price band of its initial public offer (IPO) at Rs 85-102 per equity share. The issue is slated to open for subscription from June 24 to June 27 and will help the bank raise up to Rs 816 crore. Merchant bankers to the issue will announce the pricing on June 28. The bank is offering to sell eight crore equity shares, which will see the government stake’s falling to 80.2% from the current 100%. Announcing the details of the issue, HA Daruwalla, chairman and managing director of the bank, said, “Post-public issue, the bank’s capital adequacy ratio will improve by 100 basis points to 11.8%. Moreover, since we do not have an overseas office as of now, Basel II will be effective for us only from 2008-09.” Banks with overseas offices have to implement the Basel II norms from 2007-08. On interest rates, Ms Daruwalla said, “We expect interest rate to soften by October. But before that interest on deposits would come down parly because there is ample liquidity in the system and partly because interest rates are already very high.” Central Bank is among the last few government-owned banks, which have not offloaded their stake in the equities market. Other government-owned banks that have not entered the capital market include Punjab & Sind Bank and United Bank of India. The bank is India’s third largest in terms of branch network, which stands at 3,194. The bank, which currently has 525 branches under core banking solutions, will bring another 475 under it by the end of this fiscal, said bank official. Regarding the bank’s subsidiaries, Centbank Financial & Custodial Services and Cent Bank Home Finance, Ms Daruwalla said, “As of now, they are having a positive net worth. As long as they are profit making there is no reason for consolidation. But a time would come when we would have to take a real relook and decide whether to retain them as standalone subsidiaries or merge them with us.”
The third largest Bank in India in respect of number of branches, Central Bank is entering the capital market with an initial public offering (IPO) of 80,000,000 equity shares of Rs 10 each for cash at a price to be decided through a 100% book building process. The IPO opens for subscription on July 24, 2007, and closes on July 27, 2007. Price band has been fixed between Rs 85 per equity share and Rs 102 per equity share.The book running lead managers to the issue are: ICICI Securities Primary Dealership Limited, Citigroup Global Markets India Private Limited, Enam Financial Consultants Private Limited, IDBI Capital Market Services Limited and Kotak Mahindra Capital Company Limited. Intime Spectrum Registry Ltd is the registrar.The bank posted growth of 3.96% in net interest income at Rs 2,474.43 crore (Rs 24.74 billion) for FY07. Its net interest margin stood at 3.16%.Advances grew by 38.18% to Rs 51,795.48 crore and deposits rose by 24.51% to Rs 66,482.65 crore.