Mangalore-based private sector lender Karnataka Bank will raise up to ₹600 crore through a qualified institutional placement (QIP), according to a term sheet seen by Mint.
The base size of the QIP is ₹400 crore with an option to raise up to ₹600 crore. At the higher end of the base size, Karnataka Bank plans to issue 26.66 million shares at a face value of ₹10 each.
As per the term sheet, the indicative issue price is ₹225-230 per share. The bank had informed the BSE that the meeting of the board of directors is scheduled on 27 March, to consider and approve the issue price for QIP.
The indicative floor price is ₹231.43 per share which implies a marginal discount from Friday’s closing price of ₹231.05 on the National Stock Exchange (NSE). The Securities and Exchange Board of India allows up to 5% discount on the floor price.
Ambit Pvt Ltd and Avendus Capital Pvt Ltd are the book-running lead managers for this fundraise.
In September last year, the lender received approval from the board to raise ₹1,500 crore in the capital which includes options like preferential allotment, QIP, or bonuses.
“So, we have exercised that and raised ₹800 crore. So, we have to raise the remaining ₹700 crore to make sure that we are comfortable,” Srikrishnan H, managing director and chief executive officer, Karnataka Bank, had said in an earnings call on 23 January.
He had said the bank’s capital adequacy is comfortable, but it needs growth capital. “Additionally, the fact that we are going to repay another Rs320 crore of Tier 2 bonds in February, that is also an option we will need to exercise to augment the capital,” he had added.
Karnataka Bank has 904 branches across India with a presence across all tiers.
Gross non-performing assets rose to ₹2,537 crore in the December quarter because of higher fresh slippages from the restructured book. However, the management is confident about reducing it in the future.
The company had expressed concern about slippage. In the December quarter, slippages inched up, pushing the bank’s non-performing assets from the restructured book to 0.80% from 0.52% quarter-on-quarter. “We believe that in the next 1 to 2 quarters, with great monitoring and very close attention, we should be able to control this,” Srikrishnan H had said in the call.
The management had suggested that approximately 35-40% of the current book, which amounts to around ₹2,000 crore and is restructured, would be under stress.
That said, Karnataka Bank remains confident of continuing its credit growth, and highlighted that the lender is on track to achieve its guidance on gross advances to ₹1 trillion mark by 2026. As of December end, its gross advances stood at ₹69,741 crore.
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Published: 22 Mar 2024, 05:50 PM IST