Punjab National Bank launches Rs 5,000 crore QIP, Goldman Sachs upgrades
India’s second-largest state-run lender Punjab National Bank launched a QIP (qualified institutional placement) on Tuesday. Through the share sale, Punjab National Bank is expected to garner up to Rs 5,000 crore.
India’s second-largest state-run lender Punjab National Bank launched a QIP (qualified institutional placement) on Tuesday. Through the share sale, Punjab National Bank is expected to garner up to Rs 5,000 crore. A total of about 212.79 crore shares have been offered via QIP route and the bank has approved a floor price of Rs 176.35 per equity share. Punjab National Bank may offer a discount of not more than 5% on the floor price. “The issue was authorised and approved by the board by way of their resolutions dated September 27, 2017, and by the shareholders of the Bank by way of their special resolutions dated December 4, 2017,” PNB said in an exchange filing.
Punjab National Bank is expected to raise at least Rs 3,000 crore with an upsize option for another Rs 2,000 crore, Reuters said in a report. The total fund-raising of Rs 5,000 crore, including the upsize option, is aimed at boosting the bank’s capital ratio. The public sector banks are raising funds as part of a mega recapitalisation plan of Rs 2.11 lakh crore in which government will inject Rs 1.35 lakh crore through recapitalisation bonds, while the banks are required to raise about Rs 58,000 crore on their own.
Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC, Kotak Mahindra Capital, Morgan Stanley and PNB Investment Services managing the QIP issue of Punjab National Bank. Shares of Punjab National Bank were trading little changed, up 0.12% at Rs 173.05 while it made a day’s high of Rs 176.1 on BSE.
Meanwhile, research and brokerage firm Goldman Sachs raised rating for Punjab National Bank to “neutral” from “sell” and hiked the price target to Rs 197 rupees from Rs 140, citing moderating new NPA (non-performing assets) formation, better potential for recovery of bad loans in sectors such as iron and steel, a shift in focus to operating profitability.
Punjab National Bank commenced operations on 12 April 1895 and has grown to become the second-largest public sector bank in terms of total advances, deposits and assets as at 31 March 2017, according to the Indian Banks’ Association. The Bank has a presence throughout India with a total of 6,940 branches, two-thirds of which are located within rural and semi-urban areas in India, 9,753 ATMs, 8,224 banking correspondents and more than 10 crore customers as at 30 September 2017. As at 30 September 2017, Punjab National Bank had gross deposits, gross advances and a total asset base of Rs 6.36 lakh crore, Rs 4.32 lakh crore and Rs 7.32 lakh crore, respectively.
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