Bank of India raising funds for credit expansion

By siliconindia   |   Friday, 28 December 2007, 13:11 Hrs
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Mumbai: Bank of India plans to raise at least $350 million (Rs 1,400 crore) through the Qualified Institutional Placement route for funding credit expansion and new ventures. The shares will be offered to public sector enterprises and mutual funds.

"The capital will be a buffer for us to meet our credit expansion needs and for investment in lucrative joint venture opportunities. We hope to close the QIP issue by the end of next month," said T.S. Narayanasami, Chairman and Managing Director, Bank of India.

The bank will raise equity capital by issuing around 3.78 crore new equity shares at a minimum floor price of Rs 359 per share or more if the shares gain at the time of tapping the market. The QIP will dilute the Government’s holding in the Bank’s shares by 5 per cent from 69.47 per cent to 64.47 per cent.

The bank’s capital adequacy ratio at the end of September stood at 12.57 percent. The bank’s total credit crossed Rs 1 lakh crore and assets are at Rs 1.58 lakh crore.

The bank plans to enter life insurance sector through a joint venture with Union Bank of India and Dai Ichi Mutual Life Insurance. It will initially invest Rs 127 crore in the insurance venture.

"There is a lot of organisational effort that goes into a follow-on public offer. We will also be saving in terms of costs by opting for a QIP," said Narayansami.

He added that the timeframe for executing a QIP was much shorter compared to a follow on public offer.

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