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DCB flotation price band at Rs 22-26

Mumbai, Sept. 25: Development Credit Bank (DCB), the private sector bank promoted by Switzerland-based Aga Khan Fund for Economic Development (Akfed), has set a price band between Rs 22 and Rs 26 per share for its forthcoming initial public offering (IPO).

DCB is entering the capital market with an initial public issue of 71,500,000 shares at a price to be determined through a 100 per cent book-building process. The issue will open for subscription on September 29 and close on October 6. DCB would raise between Rs 157 and Rs 186 crore through the IPO.

The issue comprises a reservation of 2,502,500 shares for eligible employees and the net issue to the public would be for 68,997,500 shares. It will help the bank strengthen its capital base apart from enabling the bank to meet the capital adequacy required by the Basel II norms, which will be applicable from next year.

According to Adil Kasad, chief financial officer, DCB, the bankís capital adequacy ratio will rise to 19.5 per cent from the current 9 per cent after the IPO.

Speaking to newspersons here today, Gautam Vir, managing director of DCB, said the bank will continue to focus on the SME sector, which has been its traditional area.

While the Aga Khan Fundís holding is now at 58.43 per cent, it will have to bring it down to 10 per cent in consonance with Reserve Bank of India (RBI) regulations. Bank officials said though there is a plan to bring down the stake to levels prescribed by the central bank, no time limit has been set.

In February, Housing Development Finance Corporation (HDFC) and two others picked up a 15 per cent stake in DCB for a sum of Rs 52 crore.

The other two investors who picked up the stake include Khattar Holdings from Singapore and Amtel Finance. All the three investors, however, stepped in as pure financial investors in the bank.

The placement resulted in Aga Khan Fundís holding coming down from 69 per cent. Last year, the fund infused $32 million into the bank to strengthen its capital base.

The book running lead managers to the IPO are JM Morgan Stanley Pvt Ltd and Enam Financial Consultants Pvt Ltd.

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