The Telegraph
Since 1st March, 1999
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Price holds key to IOB equity return

Calcutta, Aug. 29: Indian Overseas Bank (IOB), whose public issue opens next week, says it could go back on its decision to return equity worth Rs 75 crore to the government if the shares are not priced correctly. “Under existing norms, the government demands Rs 5 premium on a Rs 10 share. But this formula might change,” chairman and managing director S. C. Gupta said.

The board had decided to return Rs 75 crore a couple of months ago. “The government will let us know its decision. We will see if the formula is favourable to us. We might backtrack otherwise,” he added.

The planned return of bank equity will bring the government’s stake in the bank down to 54 per cent. IOB is the only bank in the country which has made a second trip to the capital market. It entered the market in September 2000 to bring down the government’s stake to 75 per cent. The second offering, which opens on September 3, will cut the government’s stake in the bank to 61.23 per cent. The bank is offering 10 crore equity shares of Rs 10 each at a premium of Rs 14 per share, aggregating Rs 240 crore.

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