Indian lender PNB looking to raise up to $931m via share sale

Photo: Reuters

Punjab National Bank is looking to raise equity capital up to 7,000 crore via share sale as it looks to strengthen its balance sheet in a pandemic induced environment.

In an exchange filing, the state-owned bank said that it will raise a total of 10,000 crore of capital via shares and tier 2 bonds. The 7000 crore of equity capital will be raise through qualified institutional placement (QIP), follow on public offer (FPO) or rights issue.

As on 31 March 2020, PNB’s common equity tier 1 (CET 1) capital, a yardstick to measure a bank’s financial strength, stood at 11.9% higher than 7.49% last year. The bank’s total capital adequacy ratio as on 31 March rose to 14.14% compared to 9.73% last year.

PNB amalgamated Oriental Bank of Commerce and United Bank of India with itself effective April 1 this year. With the merger, the bank now has about 11,000 branches, more than 13,000 ATMs, one lakh employees and a business mix of over 18 lakh crore.

The government infused 16,091 crore capital in PNB during 2019-20 and 5,908 crore in the preceding year. As a result, the government holding in the bank post September rose to 83.19 per cent as against 75.41 per cent at the end of March 2019.

PNB’s plans to raise capital come at a time when banks are looking to shore up their equity base in anticipation of a rise in bad loans stemming from Covid19 pandemic. The country’s largest bank State Bank of India is looking to raise upto 20,000 crore of equity capital in fiscal year 2021.

Among private sector banks, Yes bank is in the process of raising upto 15,000 crore through follow up on public offer. ICICI bank on Wednesday said that it is looking to raise equity capital upto 15,000 crore after a gap of 13 years. On 28 June, Mint reported that India’s largest private lender HDFC Bank Ltd. too is planning to raise Rs. 10,000 – 13,000 crore via share sales in India and issuance of American Depository Receipts (ADRs) in the third quarter of 2020-21,

Axis Bank has announced it would raise upto 15,000 crore via a share sale. Private lender Kotak Mahindra Bank has already raised 7,442 crore through a QIP.

According to a Credit Suisse report dated 27 May 2020, Indian banks may need to raise $20 billion in additional capital for increased provisioning over the next 12 months as credit quality weakens. The investment bank said it expects private sector banks to raise $7 billion in capital, while public sector banks may require $13 billion worth of recapitalization.

The article was first published on livemint.com 

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.