Kohli: On a cash cruise

Mumbai, March 3: Punjab National Bank (PNB) has fixed a price band of Rs 350-390 for its follow-on public offer of up to eight crore shares.

At the upper end of the price band, the offering will raise Rs 3,120 crore, while at the floor price, it will garner Rs 2,800 crore.

The higher price of Rs 390 is a discount of 11 per cent on the closing price of PNB shares on the Bombay Stock Exchange today. The stock closed at Rs 436.70 after opening at Rs 440.

PNB said each investor can apply for a minimum lot of 15 shares and in multiples thereof. The 100 per cent book-built offer will open on March 7 and close on March 11.

Of the eight crore shares, the fresh offering would be 6.4 crore. Ten per cent of the issue will be reserved for employees and a similar amount set aside for existing shareholders.

In recent weeks, PNB chairman and managing director S. S. Kohli has said the amount raised through three crore of the eight crore shares on offer will be returned to the government. The equity will be given back at the issue price by March 31. The bank will then reduce three crore shares held by the Centre in accordance with the provisions of Section 3 (2BBA)(a) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

The bank also indicated that after the follow-on offer, the paid up capital will be increased to over Rs 345 crore from Rs 265 crore.

At present, the government holds 80 per cent in the bank, institutional investors 15.95 per cent and the public holds 3.61 per cent. The rest is with private corporate bodies and NRIs/OCBs.

The bank has recorded a higher net profit of Rs 314.27 crore for the quarter ended December from Rs 259.80 crore in the corresponding previous period. Total income increased to Rs 2,380 crore for the quarter.

Recently, a host of banks have announced their plans to come out with another round of public offerings.

Calcutta-based Allahabad Bank has recently filed a draft red herring prospectus with the market regulator, while Bank of Baroda has secured the Centre?s nod for its second public issue of 71 million shares.

Oriental Bank of Commerce and Bank of India are also mulling similar floats.